1.A firm's demand curve in period 1 is Q=25 - P. Fixed costs are 20 and marginal costs per unit are 5. (5%)

a.Derive equations for total revenue and marginal revenue.

b.At what output will marginal revenue be zero?

c.At what price will total revenue be maximized?

d.At what price and output will profit be maximized?

e.Calculate the maximum profits the firm makes.

2.Ethio-telecom estimated the demand and supply for mobile data packages in MB per day as Qd=50-2P and P=Qs/2+5. With the introduction of new telecom service providers, the price is expected to be 5 cents per MB.

a.Estimate the equilibrium price and quantity

b.What would happen to the market at the new prices of 5 cents?

c.Compare the price, the demand, and the supply before and after the introduction of the new service provider