Attached. Please let me know if you have any questions or need revisions.1. Consider an industry with 25 firms who all have the cost function. 𝐶 = 3 + 5𝑞 2(a). Find the competitive industry supply curveC = 3+5q2𝑑𝑐MC = 𝑑𝑞= 10qMC=10qP=MCP=10qSupply curveQ(s)=0.1p(b). Assume industry demand is 𝑝 = 400 − 5 /2 𝑞, find the competitive industry price and quantity.Demand, p=400-5/2qQ(D)=Q(S)5P + 2q = 4005q2= 400-p25Q(D) = 160 – pQ(s)= 0.1pEquating the two equations to find the price and quantity values20.1p = 160 – 5p250.1p + p =1605p=16010P= 320Industry priceSubstituting the value of p in Q(s) to get the quantity valueQ(s)= 0.1*320Q= 32c. Calculate the producer surplus, consumer surplus, and welfare (using that these areas aretriangles)this is explained using the demand and supply curve.priceq=0.1p400consumer surplus320producer surplus5P=400 – 2q032quantityConsumer surplus12𝐴 = 𝑏ℎb=32h= (400-320) =8012*32*80=1280consumer surplusProducer surplus1A=2bhb=320h=3212*32*320=5120welfarewelfare= consumer surplus+ producer surplus1280+5120=64002. Assume all firms from question 1 merge into one monopolist.(a). Find the monopolist price and quantitywhen the 25 firms merge the supply curve will take the following format;Q(S) = 0.1PMultiplying by 25 we get.Q(S)=25*(0.1p)Q(S)=2.5p52Using the demand function; p= 400 – qQ(D)=Q(S)2Q(D) equation above, Q(D) = 160 – 5pTherefore, equating the two equation to find the price and quantity …
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