There is a monopolist, ConcreteMex, in the concrete market in Mexico. The demand function is QD = 100 - 50p. The marginal cost of production is c = 0.4. 1.1. Compute the profit maximizing price and production level for ConcreteMex. (4 points) 1.2. Calculate the consumer surplus, producer surplus, deadweight loss, and illustrate them in a graph. (6 points) 1.3. ConcreteMex claimed the high price is due to high transportation costs and persuaded the government to help cut down the costs. As a result, for every unit of concrete sold, the government subsidizes ConcreteMex 0.2 dollars. What are the new profit maximizing price and production level for ConcreteMex? (6 points) 1.4. Under the subsidy policy and the new price in Question 1.3, calculate the consumer surplus, producer surplus, and deadweight loss. You do not need to consider government spending for the deadweight loss. (6 points) 1.5. What is the total government expenditure for the subsidy policy? Compare your answers in Questions 1.2 and 1.4, and argue who benefit more from the policy, the consumers or ConcreteMex? Illustrate and explain how the producer surplus changes from Question 1.2 to 1.4 in a diagram. (8 points) 1.6. Compare your answers in Questions 1.2 and 1.4, what is the change in the deadweight loss? What is the change in the total surplus? Can we say the subsidy policy makes the economy more/ less efficient because it decreases/increases the deadweight loss? Explain why or why not. (5 points) 1.7. Suppose ConcreteMex wants to enter a different market, the competitive market in Texas. To enter the market, ConcreteMex needs to pay a fixed cost of F = 1, and its variable cost in Texas is VC = (0.4+Q)Q. What is ConcreteMex's total cost, marginal cost, and average total cost in Texas at production level Q? (6 points) 1.8. Suppose ConcreteMex is a price taker in the competitive market in Texas. If the market price in Texas is p!=0.4, what is ConcreteMex's supply Q" and profit in Texas? What is its supply if the price is p!=3? (5 points) 1.9. In a diagram, illustrate how the marginal cost and average total cost in Texas vary as a function of Q, and how ConcreteMex's supply in Texas varies with price p!. (5 points) 1.10. If the price in Texas is p!=3, what is ConcreteMex's profit at its optimal supply in Question 1.8? Is the profit positive (or equal to zero)? Explain why the firm can earn positive (zero) profit in the competitive market. (4 points)