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What is the short-run supply curve

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The soft drinks industry is composed of 100 identical firms, each having short-run total costs given by STC= q2 + 5q, where q is the output per day.

  1. What is the short-run supply curve for each soft drink producer and for the market as a whole?
  2. Suppose the demand for total soft drinks production is given by Q = 1,150 - 50P. What is the equilibrium price and quantity traded in this marketplace?
  3. Graph the S and D curves and the market equilibrium. (Note: Calculate intercept terms. Show your work.)
  4. Compute consumer surplus and producer surplus in this case.
  5. Suppose now that the government imposed a $2 tax on soft drinks, aiming to reduce consumption of sugar and obesity. What is the new equilibrium price and quantity?
  6. Calculate the deadweight loss (DWL) that resulted from this tax. What share of the DWL is incurred by the consumers? By the producers?

Reference no: EM133076805

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