1) Consider a perfectly competitive market with (inverse) demand of P = 90 - 3Q and supply of P = 10 + Q.
a) Decide the equilibrium price and quantity.
b) Compute consumer and producer surplus.
c) Draw a diagram that depicts the market and identify the equilibrium.
2) Presume a firm that has total costs of T C = 2q^2 +18 can sell its good at price p = 12.
a) What is the marginal cost, MC? What is the average cost, AC?
b) How much will the firm produce and what are the profits at this output level?