Consider a competitive market for red lentils with 10,000
identical farmers, a competitive market price of $5 and the
following ?? for each farmer:
MC = $0.5+ $0.05Q
Also consider the following market demand function:
QD=1,100,000-40,000P
a) Calculate the optimal level of production (in tonnes) for
each farmer (show workings).
b)Assuming 10,000 lentil farmers of equal size, determine the
market supply function and the equilibrium market quantity (show
workings).
c) Consider that the government now imposes a 25% tax...