1. A small apple producer sells its apples in a perfectly competitive market. The current price for apples is $200 per unit (1 unit =100 pounds). The firm's total cost is c(w) = 3200 + 2q^2, where quantity q is measured in units. (a) Assume that this producer currently produces and sells q = 30 units of out-put. What is it marginal cost at this level of production ? Explain why this level of production is suboptimal at the current market price. What should this producer do in the future to increase its profits, assuming that the price remains at the current level for several years? (b) What would be the optimal level of output at the current price of $200? (c) If many other apple producers in the market have the same cost function, what would you expect to happen to the price of apples in the long-run? Explain your answer clearly and, if you believe the current price is not stable in the long-run, compute the long-run equilibrium price. (d) Assume now that the current market price for apples is $160 per unit, and the government decides to tax producers at a rate of $5 per unit. What will be the short-run consequence of this taxation? What is likely to happen in the long-run if the tax is maintained