generally? Q5. (X points total) The market for paper in a particular region of the United States is characterized by the following demand and supply curves: Qd = 160,000 - 2,000 PQs = 40,000 + 2000 P Where Qd is the quantity demanded in 100 pound lots, Qs is the quantity supplied in 100 pound lots, and P is the price per 100 pound lot. Currently, there is no attempt to regulate the dumping of effluent into streams and rivers by the paper mills (paper mills use dioxin, a known toxin, in the process of making whiter paper). As a result of the lack of regulation, dumping is widespread. The marginal cost associated with the dumping of the toxic effluent is as follows: MC = 0.0006 Qs THOMCIA. -3 ameriol bell a) Calculate the output and price of paper if it is produced under competitive conditions and no effort is made to monitor or regulate the dumping of effluent. b) Determine the socially efficient price and output of paper. c) Explain why the answers you calculated in parts a) and b) differ.(X points total) Executives at Toyota Motor know that the firm's profits depend upon two parameters: (1) how hard the managers work, and (2) the state of the economy. For simplicity, assume that managers can exert either maximum or minimum effort and that the economy can be either favorable or unfavorable. Toyota's profits under various situations are: Favorable Economy Unfavorable Economy Maximum Effort 700,000 400,000 Minimum Effort 400,000 200,000 Toyota considers there to be an equal probability of either state of the economy. Managers consider the cost of effort to be C = 55,000 x, where x = 1 for maximum effort, 0 for minimum effort. Toyota is considering several different pay schemes and has asked for your advice on which scheme will lead to the most profit for Toyota: i.a flat salary of $30,000 that is not tied to Toyota's performance ii. a bonus of 0 if profit equals 200,000 or 400,000 and a bonus of 120,000 if profit equals 700,000 iii. a bonus determined by the formula: B = 0.20(PROFIT - 300,000) iv. a bonus determined by the formula: B = 0.24(PROFIT - 300,000) Evaluate each alternative in terms of their incentive effects for the manager and their effect on Toyota's profitability. Which pay scheme do you recommend and why