Consider a mid-sized town located 50 miles outside of a major city. Many residents of this town use the local train and commute to work and/or school in the major city. Esther Parker owns and operates the only caf in this mid-sized town, and this profit maximizing firm is conveniently located near the train station. While she sells a variety of drink, sandwich, and pastry combinations, the most popular is the EPM (energy packed meal). Consider that the demand for a EPM is described by the equation: P = 17-0.025Q, where Q is the number of EPMs per week, and P is the price per EPM. The marginal revenue is described by the equation: MR = 17-0.05Q, and with monthly loan and lease payments, Esther's caf faces a weekly fixed cost of $100. Additional costs are mainly operational, and these include its labor costs and ingredients. These additional costs can be described by the equations: AVC=2+0.025Q and MC = 2 + 0.05Q, where Q is the number of EPMs per week.

Currently, the price for an EPM at Esther's cafe is $12.50

1. What is the current quantity traded? (report your numerical answer at 4 decimal places)
2. What is the profit at the current quantity traded?
3. What is the measure of inefficiency at the current market outcome, given that if the market is efficient, this value is 0?

Now consider that with new grants offered (through the government's infrastructure bill) to small businesses, new firms enter the market, and the market adjusts. Esther's cafe remains dominant in the market, while the firms are highly competitive and provide the same EPMs per week. The typical new cafe has a smaller facility and provides 10 EPMs per week. The residual demand is P = 11 - 0.0125Q. The residual marginal revenue is MR = 11 - 0.025Q and the competitive supply is MC = 5 + 0.025Q.

1. Given the change in the market environment, what is the current quantity traded at Esther's cafe? (report your numerical answer at 4decimalplaces)
2. Given the change or a change in the market environment, what is esther parker profits at the current quantity traded.
3. Given the change in the market environment , how many new firms are currently operating in the market.
4. Given the change in the market environment what is the total market quantity ?