Solve the following questions.

1. The demand curve for hotel rooms is Qd = 1000-5Pp and the supply curve is Qs = 200+3Ps, where Qd is the quantity demanded and Qs is the quantity supplied, Pp is the price paid by buyers and Ps is the price received by sellers. Using the information above, find equilibrium Price and Quantity for Hotel Rooms 2. In Heartland, the minimum wage is currently $4.00 per hour and the fast-food industry is the only industry that pays the minimum wage. 50% of the workers in the industry are between 16 and 21 years old. The president of Heartland, concerned about decreasing the proportion of families with incomes below the poverty line, proposes increasing the minimum wage by 20%. a. Assume the labor market for low skilled workers is perfectly competitive. Explain why an increase in the minimum wage might reduce employment in the fast-food industry. b. Use supply and demand analysis to describe the likely effect of this increase in the minimum wage on the price and quantity sold of meals at fast-food restaurants? c. If an increase in the Minimum Wage will cause the Equilibrium Quantity of Minimum Wage Labor to decrease, would you then suggest that the Minimum Wage should not be increased? Why or Why not?Question #2; Two firms are deciding simultaneously whether to enter a market. If neither enters, they make zero profits. If both enter, they make profits -1, since the market is too small for two firms. If only one enters, that firm makes high profits. This game is summarized in the following matrix: Firm 2 H Firm 1 Enter Do not enter Enter -1, -1 10, 0 Do not enter 0. 5 al. What are the pure-strategy Nash Equilibria of this game, if any? by Now assume that firm 1 can enter the market with probability p and firm 2 can enter the market with probability q. Write down the expected payoff of each firm for each course of action (enter, do not enter). cl Find the Nash equilibria in mixed strategies. O e P W acervi payments accounts, still PLEsuit IsOnly foreign currency traded with the Canadian dollar. 7. For each of the following situations, outline the effect on the price of the Canadian dollar in terms of US dollars and draw a demand and supply graph that illustrates the changes that occur in the foreign exchange market for the Canadian dollar. . A contractionary monetary policy initiated by the Bank of Canada raises Canadian interest rates. b. Canada's real output rises at a time when real output in the United States is falling. c. Americans (but not Canadians) find Canada a more attractive place to make financial investments. d. Given Canada's aging population, more Canadian "snowbirds" travel to the United States each winter. e. Due to a credit crisis that affects US financial institutions more than it does Canadian ones, Canada's attractiveness as a destination for direct and portfolio investment increases. f. The Bank of Canada initiates an expansionary monetary policy that reduces Canadian interest rates.1. The following market demand and firm cost conditions describe a perfectly competitive industry p = 1000 - 0.001Q TO = 20q - 0.2q2 + 0.001q where TC is total cost. All firms are identical. Determine the long-run equilibrium price (p), market output (Q), firm output (q) and number of (identical) firms. (Hint: marginal cost is MC = 20 - 0.4g + 0.003q?) (10 marks) 2. The City of Calgary has a more or less free market in taxi service. Any respectable firm can provide taxi service as long as the drivers and cabs satisfy certain safety standards. Let us suppose that there is a constant marginal cost and average cost per trip of a taxi ride equal to $5 and that the average taxi has a capacity of 20 trips per day. Let the market demand function for taxi rides be given by Q = D(p) = 1100 - 20p, where demand is measured as rides per day and price is measured in dollars. Assume that the industry is perfectly competitive (a) What is the competitive equilibrium price per ride? What is the equilibrium number of rides per day? What is the minimum number of taxi cabs in equilibrium? (5 marks) (b) During the Calgary Stampede, the influx of tourists raises the demand for taxi rides to D(p) = 1500 - 20p. Find the following magnitudes, based on the assumption that for these 10 days in July, the number of taxicabs is fixed and equal to the minimum number found in part (a): equilibrium number of rides per day and profit per cab per day. (4 marks) (c) Now suppose that the change in demand for taxicabs in part (b) is permanent. Find the new equilibrium price, equilibrium number of rides per day, and profit per cab per day. How many taxi cabs will be operating in equilibrium? How does the new equilibrium compare to the equilibrium found in part (b). Explain why the answer found here in part (c) differs from the answer found in part (b). (4 marks) 3. Suppose that there are four identical firms in the market, each having a marginal cost given by: MC(q) = where q is the output of an individual firm. The market inverse demand is given by: P = 200 - .5Q where Q is the total amount sold in the market. (a) What is the supply curve of the industry when there is competition between the four firms