11.5 Suppose the demand for the maintenance of swimming pools is given by Q =1100 − 50P.

What will be the equilibrium in this marketplace? What will each firm’s total short-run profits be?

Graph the market equilibrium and compute total short-run producer surplus in this case.

Show that the total producer surplus you calculated in part

(c) is equal to total industry proits plus industry short-run ixed costs.

Suppose the government imposed a €3 tax on chemicals per pool maintained. How would this tax change the market equilibrium?

How would the burden of this tax be shared between owners of swimming pools and the irms that offer pool maintenance services?

Calculate the total loss of producer surplus as a result of the new tax. Show that this loss equals the change in total short-run proits in this industry. Why do ixed costs not enter into this computation of the change in short-run producer surplus?

The domestic demand for MP3 players is given by Q =5000 − 100P, where price (P) is measured in Euros and quantity (Q)

is measured in thousands of MP3 players per year. The domestic supply curve for MP3 players is given by Q =150P.

a.
CHAPTER 11 THE PARTIAL EQUILIBRIUM COMPETITIVE MODEL 341 b.
c.
d.