The purpose of this work is to study the behavior of atomic fluctuations and the spectrum of transmitted light by a nonlinear medium with absorption and dispersion. The authors make use of the system-size expansion and apply it to the quantum-mechanical Langevin's equations for the atomic operators and obtain the characteristic curves for bistable behavior, macroscopic atomic expectation values, and the spectrum of the atomic fluctuations. The calculated spectrum of transmitted light exhibits line narrowing near bistable thresholds, discontinuous formation of bands along the high-transmission bistable branch, and hysteresis effects, etc., for detuning |δ| less than a critical value δ c . For | δ|> δ c , the discontinuous character of all the physical variables of the system vanishes; the system no longer exhibits bistable behavior. The system, however, still shows cooperative and single-atom behavior separated by a critical value of the intensity of the incident coherent pump at which a critical slowing down of the medium occurs, exhibiting a phase transition.