Firms in a competitive industry produce 120,000 units ofAlewawhen the market price was $80. Today, at $120 per unit, 200,000 units are produced and supplied, daily. Consumers on the other hand buy 120,000 when the market price is $100 per unit but would buy only 110,000 units when the price $140 per unit.

(i) What is theequilibriummarket price and quantity?

(ii) To encourage production, the government decides to add $10 to the equilibrium market price. Discuss the effect of this on

a) the quantity demanded and supplied.

b) profits/costs for existing firms.

c) market outcomes, in the long run, LR.

The market demand and supply equations for oranges are respectively given by

Qd=-p+100 and Qs=0.5p-11

a)what is the minimum price at which any firm in this market will be willing to produce?

b)what is the consumer surplus when the market is in equilibrium?