Q1. (26 pts.) Dall sells computers at price of 80. Its production function is = 2^0.5, where Q is the number of computers Dall produces, and L is the number of workers it hires.

a) What is Dalls _L? (2 pts.)

b) How many people does Dall hire at the wage of 10? (1 pt.)

c) If labor supply is given by = L/32 , and there are 4 more firms identical to Dall, what is the equilibrium wage and employment? (4 pts.)

d) What is Dalls profit in part c)? (2 pts.)

e) Suppose that Dall discovers that it is actually a monopolist at its output market, where the market demand is = 96 2. How does your answer change in part a) and b)? (5 pts.)

f) Continuing from part e), the 4 more firms mentioned in part c) still have its _L s identical to Dalls _L from part a). Repeat part c) and d). (6 pts.)

g) Continuing from part f), what deadweight losses exists in the mentioned markets? (2 pts.)

h) Continuing from part g), what policies can maximize the social welfare? Explain the policy in detail. (2 pts.)

i) Suppose that Dall can lobby to make prevent your policies in h). How much is Dall willing to spend on lobbying? (2 pts.)