A theoretical model of dynamic instability of a system of linear one-dimensional microtubules (MTs) in a bounded domain is introduced for studying the role of a cell edge in vivo and analyzing the effect of competition for a limited amount of tubulin. The model differs from earlier models in that the evolution of MTs is based on the rates of single-mesoscopic-unit (e.g., a heterodimer per protofilament) transformations, in contrast to postulating effective rates and frequencies of larger-scale macroscopic changes, extracted, e.g., from the length history plots of MTs. Spontaneous GTP hydrolysis with finite rate after polymerization is assumed, and theoretical estimates of an effective catastrophe frequency as well as other parameters characterizing MT length distributions and cap size are derived. We implement a simple cap model which does not include vectorial hydrolysis. We demonstrate that our theoretical predictions, such as steady-state concentration of free tubulin and parameters of MT length distributions, are in agreement with the numerical simulations. The present model establishes a quantitative link between mesoscopic parameters governing the dynamics of MTs and macroscopic characteristics of MTs in a closed system. Last, we provide an explanation for nonexponential MT length distributions observed in experiments. In particular, we show that the appearance of such nonexponential distributions in the experiments can occur because a true steady state has not been reached and/or due to the presence of a cell edge.