Question 5 [20 points) Firms in a competitive market face a market demand curve given by P=130-2Q. Each firm's marginal cost curve crosses the average cost curve when AC=10 and q=5. The firms incur no fixed cost. If all firms were owned by the same owner, the resulting monopoly would have a constant marginal cost curve at MC=10. a) What is the total quantity supplied in the competitive scenario? b) What is the equilibrium price when the market is competitive? c) How many firms are there when the market is competitive? d) Knowing that MR=130-4Q, what are price and quantity after the market becomes a monopoly? Consider an economy with three people: George, Jerry, and Elaine. Each of them may spend their day producing two commodities: Sponges and envelops. The following table presents the three's productivity in terms of sponges and envelops: Sponges Envelops per day per day Jerry 4 8 George 5 15 Elaine 6 3 Thus, if Jerry spends all day making sponges he produces 4 of them, but if he spends all day making envelops he produces 8, and so forth for George and Elaine. a) What are Jerry's, George's, and Elaine's opportunity cost of one sponge? b) What are the total gains from specialization and trade in sponges and envelops? (Assume that, without trade, each of them divides their time equally between the production of sponges and envelops). c) If an envelope exchanged for exactly one sponge, how many envelops would be produced? How many sponges?Traditionally, the Catholic Church directed faithful Catholics to abstain from consuming meat (beef, pork, and chicken, but not fish) on Fridays. In 1966, Pope Paul VI removed the restriction on meat consumption on most Fridays out of the year. Use economics to predict (make sure to explain your reasoning): The effect of this change on the price of meat. The effect on the price of fish. The effect on the price of leather. 9-0139: The effect on meat producers' long-run profits. Question 3 {20 points) If all firms in a competitive industry are identical (i.e., they have access to the same technology}, the industry's long-run supply curve is perfectly elastic tie, it can be represented as a horizontal line). Explain