Question

of jelly-beans has a cost function of C(g)4 5. Suppose that each firm that sells cases q2 and that the market demand for jelly-beans is QD = 10-2-P. (10 points) a. What will be the long-equilibrium ofjelly bcans consumed in this market (Q*) and what will be the short run market supply curve (Qs)? (4 points) b. Suppose that in the interest of jelly-bean consumers, the government mandates that cases of jelly-beans can only be sold for $10. Using the short-run supply curve you calculated in part (a), what is the dead-weight loss associated with this policy in the short- run? (4 points) c. What will be the deadweight loss associated with this policy in the long-run? (2 points)

Answer 1

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