1. Problem: "Short-Run Market Supply"

New England Textiles, Inc., is a medium-sized manufacturer of blue denim that sells in a

perfectly competitive market.Given $25,000 in fixed costs, the total cost function for

this product is described by:

TC = $25,000 + $1Q + $0.000008Q²

MC = TC/Q = $1 + $0.000016Q

where Q is square yards of blue denim produced per month. Assume that MC > AVC at every point along the firm's marginal cost curve, and that total costs include a normal profit.

a). Derive the firm's supply curve, expressing quantity as a function of price.

b). Graph the firm's supply curve, expressing price as a function of quantity.

c). Derive the market supply curve if New England Textiles is one of 200 competitors.

d). Calculate market supply per month at a market price of $4 per square yard.