1.Consider the market for rubber bands to be perfectly competitive. The demand for rubber bands is given by the demand curve: P=6000-0.25Q and industry supply is given by P=0.19Q. One firm in the industry, RB Company, has the total production cost of TC=34+1.2q² and the marginal costs of MC=2.4q.

a.How many rubber bands should RB Company produce to maximize profits?

b.What are RB Company's fixed costs?

c.What should RB Company do in the short run?

d.Explain in detail what will happen in this market in the long run.

2.Consider that the market for rice is perfectly competitive with an industry demand curve: Q=975-2.1*P and an industry supply curve: Q=95P.

A single firm in the industry has total costs represented by: TC= 350+0.8q² and Marginal Costs of MC= 1.6q

a.What is the equilibrium price and quantity in the industry?

b.What quantity of rice should this firm produce in order to maximize profits?

c.At this quantity, what are the firm's:

a.Total Costs

b.Average Costs

c.Variable Costs

d.Average Variable Costs

e.Fixed Costs

f.Total Revenue

g.Total Profits

d.How many firms are operating in this industry in the short run?

e.How would your solution for q* in part b change if fixed costs were instead $35?

f.Graph this market and show and explain what the firm should do in the short run and what will happen in for the firm and the industry in the long run.

3.Consider a monopolist facing the industry demand curve of: Q = 350 - 0.4 *P and total costs and marginal costs of: TC = 50 + q² and MC = 2q.

a.Solve for the profit maximizing price and quantity for this firm.

b.Solve for the firm's total costs, total revenues, fixed costs, and average variable costs at this quantity.

c.Solve for the producer surplus, consumer surplus, and deadweight loss at this point.