Recently, the spot market price of U.S. hot rolled steelplummeted to$400 per ton. Just one year ago, this sameton of steelcost $700.According to Metals Monitor, the drop in price was due to falling oil prices, along with a rise in cheap imports and excess capacity.These dramatic market changes have greatly impacted the supply of raw steel.

Suppose that last year the supply for raw steel wasQ^s_raw=600 + 4P, but this year it has shifted toQ^s_raw=4,200 + 4P.

Assuming the market for raw steel is competitive and that the current worldwide demand for steel isQ^d_raw= 9,000 - 8P, compute the equilibrium price and quantity for the steel market one year ago, and the equilibrium price-quantity combination for the current steel market.

Priceone year ago?

Quantityone year ago?

Pricefor current market ?

Quantity for current market?

Suppose the cost function of a representativesteel producer isC(Q) = 1,200 + 15Q².

How much raw steel does a representative firm produce when the market price is $700?

How much raw steel does a representative firm produce when the market price is $400?