Posted: December 30th, 2021
3. Suppose there are ten identical firms in an industry. The cost function for each firmis:c(y) = yz2 + wywhere y is the firm’s output of the homogenous good, and where w is the wage rateof workers in the industry. Suppose further that w = 1.9Qs, where Qs denotes totalindustry output.(a) Find the industry supply function assuming symmetry.(b) Suppose market demand is QD = 6 – p, where p is the output price. Find theprice, market quantity, wage rate, and total surplus in equilibrium.(c) Now suppose that the government imposes a unit excise tax of $1. What happensto the equilibrium price, market quantity, and total surplus in this case?
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