Congratulations, you are now one of the proud owners of a Beef Soda factory in theprice-takingBeef Soda

industry. The short-run costs for your factory are given below. Show all work.

Quantity(barrels) 0 1 2 3 4 5 6 7 8

Total Cost 10 14 16 17 19 22 26 31 37

1. Suppose the market price in this industry is $6 per barrel.
2. a)Comparing MR to MC, what is your profit-maximizing quantity?
3. b)How much profit would you make at this price?
4. Suppose the market price in this industry is $4 per barrel.
5. a)Comparing MR to MC, what is your profit-maximizing quantity?
6. b)How much profit would you make at this price?
7. Suppose the market price in this industry is $2 per barrel.
8. a) What is the profit-maximizing quantity? How much profit is earned?
9. Given your answers from #1 through #3, roughly sketch the supply curve for your firm.
10. Assuming there were a total of 20 Beef Soda producing firms in this market, all with the exact same cost information given above, also sketch the market supply curve in this industry.

In addition to the information above, assume consumers in the market have the following demand curve.

Price 7 6 5 4 3 2 1

Q Demanded 100 120 140 160 180 200 220

1. Given this market demand curve and the market supply curve previously found in #5, what would be the perfectly competitive equilibrium Price and Quantity? How much profit would each one of these firms make at the equilibrium? What would be the total profit of all 20 perfectly competitive firms combined?
2. Now suppose that after a massive increase in heart attacks throughout the country the government decided to add a $2/barrel tax on the sellers. Find the new market equilibrium price and quantity.