(3) Getting high (prices)? [Past exam question] After a surge of recent entry, there are 50 cannabis farmers in Colorado. Production is at an alltime high. Each farmer has produced 20 tons of cannabis. The production cost is already sunk, and there are no additional costs involved in actually selling the output. The market price for cannabis is determined by the clearing of supply and demand. In particular, the market price is determined by the inverse demand function P = 5000 4Q, where P is the market price and Q is the total quantity (in tons). For example, if Q = 500, then the market price will be P = 3000. (Technically, the supply curve is perfectly vertical in this market, because each grower is willing to supply all units of cannabis at any market price P > 0.) (a) What is the market price if the farmers supply all their cannabis to the market? What is each farmer's prot? Cb) The Cannabis Farmers' Association (CFA) suggests that if each farmer destroys half of their cannabis, they can earn higher profits. Do you agree? What is the market price if the farmers follow the CFA's suggestion? What is each farmer's profit if they follow this suggestion? Suppose the CPA is unable to force any individual farmer to destroy their cannabis, so all the farmers have to independently (and simultaneously) decide whether or not to destroy half of their crop. (c) If you believe that none of the other farmers will destroy half their cannabis crop, should you also destroy half of your cannabis? Explain your answer. (d) If you believe that all 49 of the other farmers will destroy half their cannabis crop, should you also destroy half of your cannabis? Explain your answer. (e) Set aside any personal beliefs about pot farmers that you may have and assume that all Cannabis farmers are fully rational (and care only about their own individual prots). How many farmers do you think will follow the CFA'S recommendation, and why? [Note: you do not need to do any additional calculations here]