Question: 1.Considering the following Industry Demand and Industry Supply Curves represented by the equations below: Supply: P = 495 + Q/3,310 Demand: P = 3,000 - Q/2,940

a) Use Excel to plot the supply and demand curves on a graph. Ensure you have the price on the vertical axis. Let the horizontal axis range from 0 to 10,000,000 and the vertical axis range from 0 to 3500. Use an XY (scatter) graph and do not use smoothing.

b) What is the equilibrium (market clearing) price? Be precise; calculate it and give the exact number.

c) Suppose the above industry supply and demand curves are for the short run in an industry characterized by perfect competition. ABM Corp is one of many similar companies that operate in this industry.

i) What is the short-run demand curve faced by ABM Corp? Use Excel to plot it (over a range of Q from 0 to 1000 and the vertical axis range from 0 to 2500). Use an XY (scatter) graph and do not use smoothing. Also, explain an equation to represent the demand curve.

ii) For ABM Corp, write equations and use Excel to plot (for Q from 20 to 1000 and the vertical axis range from 0 to 6000 using an XY scatter graph without smoothing) the MC curve and AC curve given a total cost curve as follows: TC = 78,000 + 2.75Q2

iii) Using the data above, what is the optimal quantity ABM Corp should produce in the short run? What will be the resulting total revenue, total cost, and total economic profit?

iv) Given the results from (iii) what do you expect to happen in the long run to the industry supply curve (give a word description, no equations are necessary)? Explain why this happens.

v) Given (iv), what do you expect to happen to the demand curve faced by ABM Corp? Explain and be specific as to the demand curve's precise equation - write the equation. vi) Given (v), what will happen to the quantity produced, revenue, cost, and economic profit of ABM Corp? Show relevant numbers.

Question 2. Considering the following industry supply and demand curves: Supply: P = 552 + Q/3,200 Demand: P = 3,445 - Q/2,960 a) Suppose the government imposes a specific tax on producers of $100 per unit. Show the equations for the new supply and demand curves. What will be the equilibrium price and quantity? How much did each of the price and quantity change compared to the original equilibrium amounts? What proportion of the tax is paid by suppliers and what proportion of the tax is paid by consumers? If the tax is meant to reduce the environmental damage caused by the production and consumption of the product, has it been effective, why or why not? b) Redo the analysis in (a) assuming the original demand curve is P = 1800 instead. c) Redo the analysis in (a) assuming the original demand curve is Q = 4,120,000 instead. d) Suppose the government imposes a specific tax on consumers of $100 per unit. Show the equations for the new supply and demand curves. What will be the equilibrium price and quantity? How much did each of the price and quantity change compared to the original equilibrium amounts? What proportion of the tax is paid by suppliers and what proportion of the tax is paid by consumers? If the tax is meant to reduce the environmental damage caused by the production and consumption of the product, has it been effective, why or why not? e) Redo the analysis in (d) assuming the original demand curve is P = 1800 instead. f) Redo the analysis in (d) assuming the original demand curve is Q = 4,120,000 instead. g) Suppose the government imposes an ad valorem 8% tax on the sale price received by producers. Show the equations for the new supply and demand curves. What will be the equilibrium price and quantity? How much did each of the price and quantity change compared to the original equilibrium amounts? What proportion of the tax is paid by suppliers and what proportion of the tax is paid by consumers? If the tax is meant to reduce the environmental damage caused by the production and consumption of the product, has it been effective, why or why not? h) Redo the analysis in (g) assuming the original demand curve is P = 1800 instead. i) Redo the analysis in (g) assuming the original demand curve is Q = 4,120,000 instead

Question 3. Considering the following Industry Demand and Total Cost Curves for an industry characterized by monopoly: Total Cost = 690,005 + 6.91Q3 Demand: P = 1,080,005 - 160Q2 a) What are the marginal cost, average cost, and marginal revenue curves faced by FINM Corp - the monopoly firm? Indicate the equations for these curves and use Excel to plot them and the demand curve over a range of Q from 10 to 85 (with the scale shown in increments of 10) with the vertical axis from -$50,000 to $110,000 (with a scale shown in $10,000 increments). Ensure you plot enough points to get smooth curves. Use an XY scatter graph without the smoothing option. b) At what level of quantity would FINM's average cost be minimized? c) What level of quantity does FINM Corp choose to produce? d) What is the price charged, total revenue, total cost, and economic profit for FINM Corp? e) What is the price elasticity of demand given the quantity FINM Corp chooses to produce? Interpret what the price elasticity of demand number you calculated implies about total revenue. What strategy implications might this mean for FINM Corp. f) If this industry begins to become more competitive, what will happen to the demand curve faced by FINM Corp? No equations are necessary, but give a sufficient word description as to what will happen. g) What actions might a corporation's management take to maintain a competitive advantage? Please be clear and concise. i) Consider a monopoly with a contestable market. ii) Consider an oligopoly situation. iii) Consider monopolistic competition and think of both demand and production aspects in your suggestions. h) Suppose the good produced was actually something desirable for society to have and the government wanted to put a price ceiling on the good (there would be no tax in this case). What price should the government set so as to ensure there is no shortage and no surplus of the good? What will be the quantity consumed in this case? What will be FINM's total revenue, total cost, and economic profit in this case?