the long run equilibrium price for this industry? (1) Assume the previous industry is such that there is an incumbent firm which cannot recover the (already paid) fixed cost over any horizon even if it exits the industry but firms that want to enter still must pay it. What is the long run equilibrium price and distribution of profits for this industry? m) Derive the isoquant for a firm that has two inputs which are perfect compliments. Use this to solve for the firms cost minimizing input bundle and in terms the cost function c(y). Repeat for a firm that has a perfect substitute technology for producing output. (n) Given our discussion in class about eyeglasses and correcting for any typos in the slide, we can speculate about another similar his- torical event. In 1977, the Supreme Court ruled that individual states could not ban lawyers from advertising either their avail- ability or their prices. Unlike with eyeglasses, all states enacted a ban. What do you think was the effect of this decision on legal fees? (o) Suppose the demand for product X = 10 - 2X + Y where Y is a substitute that is not currently being produced. Assume X has a marginal cost of one dollar. Entry is completely barred and there is a unique monopolist that produces good X. Find the firms price quantity and profit. [Hint: remember that MR.(Q)=MC(Q) for the function MR(Q) which is computed by taking the derivative of the demand curve. The market price is taken directly from the demand curve.] i. Next suppose that the incumbent considers introducing good Y. The demand for good Y is Py = 10-2Y -X. Assume that there is a fixed cost of 4 dollars for introducing Y and a con- stant MC of 1 dollar for each additional unit of Y. Find the optimal values for Pr, Py, x, and y. Will this incumbent intro- duce Y? Is it in societys best interest for Y to be introduced? Compute T'S to show this