The audio tape market in country A is perfectly competitive. There are 1,000 firms in this market and each firm has the following cost structure:

OutputMarginalAverageAverage

(audio tapescost ($ pervariable costtotal cost

per week)additional tape)($ per tape)

1506.008.822.00

2006.407.8017.70

2507.007.0014.92

3007.657.1013.70

3508.407.2012.86

40010.007.5012.45

45012.408.0012.40

50012.709.0012.96

The market demand schedule for audio tapes is as follows:

PriceQuantity demanded

($ per tape)(audio tapes per week)

3.65500,000

5.20450,000

6.80400,000

8.40350,000

10.00300,000

11.60250,000

13.20200,000

14.80150,000

(a)What is the market price?

(b)What is the industry's output?

(c)What is the output of each firm?

(d)What is the economic profit of each firm?

(e)What is the shutdown point?

(f)What is the long-run equilibrium price?

(g)Peter earns a weekly income of $4000.The price of rice is $50/kilogram.Peter spends all his income on rice and all other goods. Suppose the government now subsidizes the consumption of rice. For every $50 expenditure on rice, the government will subsidizes the consumer by $10.Will Peter be better off?Explain in terms of the budget line and indifference curve.