Answer to Question #107525 in Macroeconomics for Mimi

Question

The short-run total cost function of a firm that employs labour (L) and fixed capital is given by c = vKo + wq^1/B × Ko^ -a/B

Where w is the cost of the labour and v is the cost of capital

(I) Derived the marginal cost of the firm

ii. Assuming that the firm is a price taking one that sells its output at p per unit, derive the short-run supply function of the firm

iii. If there are 200 firms in the industry with similar cost conditions, compute the total market supply.

Answer 1

1. marginal cost (MC) is the cost of adding one extra unit of output to your current output level.  Marginal Cost = (Change in Costs) / (Change in Quantity)
2. a firm's short-run supply function is the increasing part of its short run marginal cost curve above the minimum of its average variable cost.
3. total market supply = 200 * average firm supply

https://www.dummies.com/education/economics/the-role-of-marginal-cost-in-a-firms-cost-structure/

https://saylordotorg.github.io/text_economics-theory-through-applications/s12-01-market-supply-and-market-deman.html

https://www.investopedia.com/terms/m/marginalcostofproduction.asp