Final answer:
To find the equilibrium price in the competitive peanut butter industry, we need to set the quantity demanded and supplied equal to each other and solve for the equilibrium quantity. Once we have the equilibrium quantity, we can plug it back into the demand curve equation to find the equilibrium price.
Step-by-step explanation:
In the competitive peanut butter industry, the equilibrium price can be determined by setting the quantity demanded and supplied equal to each other. In this case, the quantity demanded is given by the demand curve equation: P = 20 - (2Q/1000). To find the equilibrium price, we need to determine the quantity at which the quantity demanded and supplied are equal.
The quantity supplied by each firm is given by the marginal cost curve equation: MC = 8 + q. Since there are 1000 identical firms, the total quantity supplied in the industry is 1000 times the individual firm's quantity.
Setting the quantity demanded equal to the total quantity supplied, we can solve for the equilibrium quantity, which can then be plugged back into the demand curve equation to find the equilibrium price.