2. Suppose that the VHS-videotape-transfer industry is comprised of a large number of identical firms each of which can digitize 5 tapes per day at an average cost of $10 per tape. A royalty must also be paid by each firm to film studios at a per-film/tape rate r that is an increasing function of total industry output Q: r = 0.002Q . Market demand for tape digitizations is given as Q =1050 - 50p . (a) Assuming the industry is in long-run equilibrium, what will be the market price and quantity of tape digitizations? How many tape-digitization firms will there be? What will the per-film/tape royalty rate be? 2 Now suppose that the government institutes a $5.50 per-firm/tape tax on the tape- digitization industry. (b) How will this tax affect the market equilibrium? In other words, what will be the new equilibrium price, quantity, number of firms, and royalty rate?(c) How will the burden of the tax be allocated between consmners and producers? (cl) What will be the less of consumer and producer surplus due to the tax? (Hint: There are two relevant industries to consider in relation to the latter.) (e) What will be the deadweight loss of the tax