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3. Consider a long-run market. where each firm's cost function is c(g) = q + 6q + 3. (a) Suppose the demand function is @(p)
3. Consider a long-run market. where each firm's cost function is c(g) = q" + 6q + 3. (a) Suppose the demand function is @\"(p) = 100 p. Compute the long-run equi- librium price and quantity. How many firms are active in the equilibrium? How many units does each firm produce? What is their profit? (b) Suppose there is a sales tax t = 1/2 (in other words, 50%). Compute the equilib- rium after the tax, that is, the consumers' price p., the producers' price ps, and the new market quantity. () What is the consumer surplus and the producer surplus after the tax? What is the tax revenue? What is the deadweight loss (DWL)
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