Refer to Figure 14-4. If there are 100 identical firms in this competitive market, what is the value of q_2, the total market quantity supplied at the equilibrium price?

• A. q_2 = 100 imes q^*
• B. q_2 = 100
• C. q_2 = q^* / 100
• D. q_2 = q^*

Answer: (A)

Verified step by step guidance

1. Identify the equilibrium price from Figure 14-4 where the market supply and demand curves intersect.
2. Determine the quantity supplied by a single firm at the equilibrium price, denoted as \(q^*\), by looking at the firm's individual supply curve or marginal cost curve at that price.
3. Recognize that in a perfectly competitive market with identical firms, each firm supplies the same quantity \(q^*\) at the equilibrium price.
4. Calculate the total market quantity supplied, \(q_2\), by multiplying the quantity supplied by one firm, \(q^*\), by the total number of firms, which is 100. This can be expressed as: \(q_2 = 100 \times q^*\)
5. Confirm that this total quantity supplied \(q_2\) matches the equilibrium quantity on the market supply curve, ensuring consistency with the market equilibrium.