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Assume that the demand curve for milk is given by Q = 100-10P, where P is the price of milk per liter and Q is

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Assume that the demand curve for milk is given by Q = 100-10P, where P is the price of milk per liter and Q is the number of liters demanded per year. The supply curve is horizontal at a price of $2. a. Assuming that the market is competitive, what is the price per liter of milk and the number of liters sold? b. With connivance of some politicians, the dairy farmers are able to form and maintain a cartel. What would be the cartel price? c. What are the rents associated with the cartel price? d. Suppose that in order to maintain the cartel, the dairy farmers simply give lump sum campaign contributions to the relevant politicians. What is the maximum contribution they would be willing to make? What is the deadweight loss of the cartel? Anne, Bruce and Colin each value police protection differently. Anne's demand for units 0f the PUbllC 800d l5 Q = 80-10P; Bruce's demand is Q: 150 - 25F; and Colin's demand is Q = 200- 20P. if the marginal cost of providing police protection is $20, what is the efficient level of police protection and what would the share of the tax burden for each of them under Lindahl pricing? Two families (A and B) live on a dark street. The local council will provide streetlights ifthe two families are willing to pay for the running costs, which are $30 a month per Streetlight. The demand of the two families for streetlights is estimated to be PA : 40 ZQAand P3 : 30 ZQB , where P is the price the family is willing to pay for a streetlight per month. i. Express the total demand function for streetlights. ii. How many streetlights should be provided? iii. If the council charges family A $15 and family B $15, could unanimity be achieved? iv. What would be the share of expenses between family A and B if unanimity is to be achieved

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