Consider 3 consumers; X, Y, Z, with the following demand for a (private) good:

qX = 5 - p

qY = 10 - 2p

qZ = 15 - 3p

where, p denotes market price, qX denotes the quantity demanded by consumer X,

etc. Moreover there are two firms, called A and B, with the following supply curves

(i.e. portion of MC curve above the AVC curve)

MC A = 2 + 0.50q1

MC B = 2 + q2

where q1 and q2 denote the quantity produced by firm A and B, respectively. Assuming

that the above consumers and producers together constitute a perfectly competitive

market, find:

(i) the equilibrium price, and the equilibrium quantities produced by each firm and

consumed by each consumer in this market, i.e. p*, qA*, qB*, qX*, qY* and qZ*;

(ii) consumer surplus of each consumer;

(iii) producer surplus of each firm.

[Note: Measure consumer and producer surpluses as areas of relevant triangles. This

method of measuring surpluses allows for the possibility of fractional units (for example, 0.75 kg of wheat) being produced or consumed.]