APEC 343 Problem Set 1 - Spring 2020 Problem 2 (6 points) Suppose that a U.S. firm wants to identify the optimal amount of copper ore to extract from a mine in Utah. The U.S. copper market is perfectly competitive and comprised of 10 firms. Each firm mines the same quantity of copper ore and sells each unit at the market price. The functional form of U.S. market demand for copper is given by Q (PD) = 480-1PD, and the inverse market supply function is given by PS(Q5) = 240 + 8Q5. Prices are represented in U.S. dollars and quantities are measured in tons. (a) Graph the U.S. market for copper ore. For full credit, label the equilibrium point as well as all axes, curves, and intercepts. (b) What is the efficient market price and quantity? (c) Indicate consumer and producer surplus on your graph. (d) How much copper will you recommend that the firm extract in order to be efficient? How much profit will this firm generate? (e) Compute and interpret the price elasticity of demand at equilibrium. Maximum word count: 20 words! If you write more than 20 words, you will receive zero (0) points