1. In a perfectly competitive market all firms and potential entrants are identical. Each has a total cost curve given by TC = 40q-q+.01q where q denotes the quantity of each firm. The market demand curve is Q = 25000 - 1000P. Find the long-run equilibrium quantity per firm, price and the number of firms. (Hint: you will need to calculate the marginal cost and average cost of the firm) 2. Suppose the cost function for a monopoly is given by TC = F + c.q where TC is the total cost, F is the fixed cost and q is the output of the firm. The demand function for the monopoly is given by q = A-bP where A > 0 and b>0. Find out the profit maximizing price, quantity, and profit for the monopoly. Also find out the expression for the marginal revenue of the monopoly as well as the elasticity of demand facing the monopoly. 3. The dancing machine industry is a duopoly. The two firms, Chuckie B Corp. and Gene Gene Dancing Machines, compete through Cournot quantity-setting competition. The demand curve for the industry is P = 100-Q, where Q is the total quantity produced by Chuckie B and Gene Gene. Currently, each firm has marginal cost of $40 and no fixed cost. Find the equilibrium price, quantity produced by each firm, and the profit of each firm. Now suppose the two firms were to form a cartel. What would be the quantity produced by each firm in the cartel agreement? What would be the profit of each firm? Suppose that Chuckie B was considering cheating on the cartel agreement and it guesses that Gene Gene is going to stick to the cartel agreement. What is the profit maximizing output of Chuckie B in that case? Is the cartel sustainable? 4. Consider a market with two horizontally differentiated firms, X and Y. Each has a constant marginal cost of $20. Demand functions are: Qx = 100-2Px + 1Py Qy = 100-2Py + 1Px Calculate the Bertrand equilibrium in prices in the market. Also, calculate the quantity sold and the profit of each firm.