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  3. question 2 20 marks consider the market for gasoline which...

Question: question 2 20 marks consider the market for gasoline which...

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Question 2 (20 marks) Consider the market for gasoline, which is perfectly competitive. Each firm in the industry produces gasoline with the same technology and has cost function: c(a) 200+5q+1/2xq. bach consumer has demand for gasoline given by g (p) 10-0.1p where p is the price of gasoline. All consumers have identical demand functions (a) Find the short-run supply curve for a typical firm. (5 marks) (b) Suppose there are 10 firms in the market. Find the short-run aggregate supply curve. (c) Suppose there are 100 consumers in the market. Find the aggregate demand curve. (1 (d) What is the short-run equilibrium when there are 10 firms and 100 consumers? (3 (e) If the government imposes a tax of $15 per unit sold in this market. Find the equilibrium (f) Compute the deadweight loss imposed by the tax. (5 marks) (1 marks) marks) marks) after the tax is imposed. (5 marks)

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