2. Suppose a steel manufacturing industry has 12 firms. Each firm has the following private marginal cost function: MCi = 4Qi, i = 1,...,12 The market demand for steel is: Q = 50 – 0.5P 2a. 2b. Solve for the industry supply curve. Graph the industry supply curve and demand curve and find the equilibrium price and quantity of steel. Now suppose each steel manufacturing firm emits damaging air pollution. Total damages from pollution increase such that the marginal external cost from each firm's steel production is: MEC₁ =2Qi, i = 1,...,12 2c. What is the marginal social cost of steel production for each firm? Solve for the industry supply curve if each firm internalizes their external costs of production. 2d. Solve for the equilibrium price and quantities for the case where the marginal external costs are internalized by all firms. Graph the results. 2e. Using the results from parts 2a. and 2b., calculate the net welfare cost when firms do not internalize their marginal external costs.

A study of ethanol as a transportation fuel reveals that the competitive equilibrium is expected to be at a price of $4 per gallon and a consumption rate of 100 million gallons/day. For a production rate of 10 million gallons/day, the marginal cost is found to be $1 per gallon. Also, a a price of $10 per gallon the demand is 10 million gallons/day. Answer the following questions for this system. 1. Determine the equations for the demand and marginal cost lines. 2. Calculate the consumer and producer surplus for the market equilibrium. 3. It was discovered later that the above information ignored a government subsidy of 50 cents per gallon. How will the demand and marginal cost lines, and the competitive equilibrium, change if this subsidy is removed?

Y6 Suppose that a market consists of 300 identical firms, all with the same cost curve: TC(4) = 0.1 + 150g?. The market demand is given by Qd(p) = 60 - p (a) What is the equilibrium price and quantity? (b) What quantity must each firm produce and sell at equilibrium? (c) Do firms make positive profits in the market equilibrium? (d) Calculate consumers' surplus, producers' surplus and total surplus.

A large share of the world supply of cocoa beans comes from Ghana and Ivory Coast. Suppose that the marginal cost of producing cocoa beans is constant at GHC1000 per bag and the demand for cocoa beans is described by the following schedule. Price (GHC) Quantity (bags) 5000 6000 7000 8000 9000 10000 11000 12000 8000 7000 6000 5000 4000 3000 2000 1000 a) If there were many suppliers of cocoa beans, what would be the price and quantity? b) If there were only one supplier of cocoa, what would be the price and quantity? c) At a meeting in October 2017 in Accra, the leaders of the two leading producers of cocoa beans discussed the possibility of cooperating to boost the price of cocoa. If Ghana and Ivory Coast formed a cartel, what would be the price and quantity? If the countries split the market evenly, what would be Ghana's production and profit? f) What would happen to Ghana's profit if it increased its production by 1000 cocoa while Ivory Coast stuck to the cartel agreement? g) Use your…