2. The cement industry in the US consists of 100 producers each of them with a cost function characterized by C(qi)=0.5qi^2+qi+2 where qi is the quantity produced by each firm.The cement market is competitive and the aggregatede mand is Q=700-100P,where Q is the total quantity of cement.
a. Find the supply curve of each firm and the aggregate supply curve.Plot them in a graph
b. What are the quantity of cement produced by each firm and the total quantity produced by the industry?
c. How much consumer surplus is generated?
3. Thefirm A&B produces high-quality widgets with a cost equal to C(qi)=2qi. The demand for widgets is Qd=100-P.
a. Suppose the firm A&B is a monopolist.What is the profit-maximizing price and quantity?How much profit does the firm collect?
b. How much consumer surplus does the firm generate? What is the deadweightloss?
c. Suppose consumers cannot see the differences between high- and low-quality widgets before purchasing them.What is the quantity sold by firm A&B if the price of low-quality widgetsis $1?
d. Suppose consumers cannot get any utility of low-quality widgets. Therefore, if they were aware and could distinguish between high- and low-quality widgets, they would purchase the high-quality widgets, regardless of the price of the low -quality widgets. How much is the firm A&B willing to pay to inform consumers about the differences between high- and low quality widgets?How can the firm A&B achieve that?