Hi,

I am in desperate need of help for some micro questions. This is one of them

Can anyone help?

Thanks in advance!

Consider a competitive market in which the market demand for the product

IS

expressed as:

P=75-1.5Q

and the supply of the product is expressed as:

P

= 25 + 0.50Q.

Price, P, is in dollars per unit sold, and Q represents rate of production and sales 10

hundreds of units per day. The typical firm in this market has a marginal cost of:

MC

= 2.5 + 10Q.

a) Determine the equilibrium market price and rate of sales.

b) Determine the rate of sales of the typical firm, given your answer to

part a) above.

c)

**If **the market demand were to increase to P = 100 - 1.5Q*, *what would

the new price and rate of sales in the market be? What would the new

rate of sales for the typical firm be?

d) If the original supply and demand represented a long-run equilibrium

condition in the market, would the new equilibrium c) represent a new

long-run equilibrium for the typical firm?

e) An output tax is imposed on ONE firm's output. What will happen to

the market price? Will the production of this firm stay the same?

Would the effect have been the same if the tax had been imposed on

all firms equally?