Cornell Pharmaceutical, Inc., and Penn Medical, Ltd., supply generic drugs to treat a wide variety of illnesses. A major product for each company is a generic equivalent of an antibiotic used to treat postoperative infections. Proprietary cost and output information for each company
reveal the following relations between price (marginal cost) and output:
P = $10 + $0.0040c.
(Cornell)
P = $8 + 80.008Q p.
Penn) A) Calculate the quantity supplied by each firm at prices of $8, $10, and $12. What is the
minimum price necessary for each individual firm to supply output? B) Assuming these two firms make up the entire industry, determine the industry supply curve
when P < $IO.
C) Determine the industry supply curve when P > $10.