The annual demand and supply for strawberries in a certain West Coast city can be represented by the following equations:

Q_D = 2,500,000 - 100,000P

Q_S = 400,000 + 200,000P

(Quantities are measured in pounds of strawberries per year; prices are measured in dollars per pound.)

1.What is the equilibrium price and quantity that would prevail in this market? (Assume that competition prevails in this market.)Explain how you arrived at your answer. (4 pts)

2.Calculate the price elasticities of demand and of supply at the equilibrium outcome.Explain how you arrived at your answers. (4 pts)

3.Suppose that the strawberry industry becomes a monopoly.The demand relationship remains unchanged, but the above-described supply relationship is replaced by the monopolist's cost function (where TC is total costs in dollars and Q is pounds of strawberries):

TC = 1,500,000 + 3Q

What price will the monopoly charge, and what quantity will it sell?Explain how you arrived at your answers.