14.8 Suppose that the long-run total cost function for the typical mushroom producer is given by TC = wq 2 ~ lOq + 100, where q is the output of the typical firm and w represents the hourly wage rate of mushroom pickers. Suppose also that the demand for mushrooms is given by Q= - l,000P+40,000, where (Pis total quantity demanded and Pis the market price of mushrooms.

a. If the wage rate for mushroom pickers is $1, what will be the long-run equilibrium out put for the typical mushroom picker?

b. Assuming that the mushroom industry exhibits constant costs and that all firms are iden tical, what will be the long-run equilibrium price of mushrooms, and how many mush room firms will there be?

c. Suppose the government imposed a tax of $3 for each mushroom picker hired (raising total wage costs, w, to $4).Assuming that the typical firm continues to have costs given by TC = wq 2

- 10g + 100, how will your answers to parts

(a) and

(b) change with this new, higher wage rate?

d. How would your answers to (a), (b), and

(c) change if market demand were instead given by Q= - l,000P+ 60,000?