It has been estimated that the world demand for wheat can be represented by thefunction P = 80 - 2Q. It has been further found that the countries supplying thismarket have marginal cost curves which when summed together are given by theequation MC = 5 + Q

What price and output levels will prevail in the world market if a free marketsituation exists?

can any one explain that in detail

The sum of the individual MC curves of producers is the supply curve. That is, MC=5+Q=P. Equilibrium occurs when supply=demand. (so, use algebra, solve for Q)

But why "The sum of the individual MC curves of producers is the supply curve"?In monopoly they are lacking of supply curve??

It has been estimated that the world demand for wheat can be represented by thefunction P = 80 - 2Q. It has been further found that the countries supplying thismarket have marginal cost curves which when summed together are given by theequation MC = 5 + Q

What price and output levels will prevail in the world market if a free marketsituation exists?

why "The sum of the individual MC curves of producers is the supply curve"?In monopoly they are lacking of supply curve??

In a free market situation, the supply curve represents the marginal cost (MC) curve of all the individual producers summed together. This is because in a competitive market, each producer sets their production level based on their marginal cost. The sum of these individual marginal costs gives us the market supply curve.

In a monopoly situation, there is a single producer in the market who has control over the supply. The monopolist does not have a supply curve because they have the ability to set the price and quantity arbitrarily. They can choose any combination of price and quantity that maximizes their profit, without considering any cost constraints.

So, in a monopoly, the lack of a supply curve means that the monopolist has control over both the price and quantity, and can set them independently without being constrained by costs. In a free market, however, the individual producers face competition and set their production levels based on their marginal costs, leading to the existence of a supply curve.

So, in the given scenario, to find the price and output levels that will prevail in the world market, we need to equate the market demand and supply.

The world demand for wheat is given by the function P = 80 - 2Q, where P represents the price and Q represents the quantity demanded. The marginal cost curve of the producers is given by MC = 5 + Q, where MC represents the marginal cost and Q represents the quantity supplied.

To find the equilibrium price and quantity (output) in the world market, we need to set the supply equal to the demand. In other words, we need to equate the quantity supplied (Q) to the quantity demanded (Q):

5 + Q = 80 - 2Q

By solving this equation, we can find the equilibrium quantity (Q). Once we have the equilibrium quantity, we can substitute it back into either the demand or supply equation to find the equilibrium price (P).