1. STC = 40 + 20Q + 0.2Q2. SMC = 20 + 0.4Q. The market price is $60.

a. Find the profit maximizing Q.

b. Calculate the maximum profit.

c. Calculate the producer surplus.

d. Show the producer surplus on a graph.

2. The market supply curve in a competitive industry is: QS = 20P – 5. The corresponding market demand curve is: QD = 2200 – 100P.

a. What is the equilibrium price in this industry?

b. What is the equilibrium output in this industry?

c. Show this equilibrium price and quantity on a graph.

d. Pin stripe the area of consumer surplus? Calculate Consumer Surplus.

e. Use horizontal stripes to indicate the area of producer surplus. Calculate producer surplus.

3. In the graph below:

a. Determine the rental price if there is a price ceiling of $400.

b. Determine the number of units rented if there is a price ceiling at $400.

c. Is there a shortage or a surplus or neither?

d. If there is a shortage (or a surplus) indicate the amount of shortage/surplus.

4. In the graph above:

a. Determine the rental price if there is a price floor of $400.

b. Determine the number of units rented if there is a price floor at $400.

c. Is there a shortage or a surplus or neither?

d. If there is a shortage (or a surplus) indicate the amount of shortage/surplus.

5. In the graph above:

a. Determine the rental price if there is a price ceiling of $800.

b. Determine the number of units rented if there is a price ceiling at $800.

c. Is there a shortage or a surplus or neither?

d. If there is a shortage (or a surplus) indicate the amount of shortage/surplus.

6. In the graph above:

a. Determine the rental price if there is a price floor of $1000.

b. Determine the number of units rented if there is a price floor at $1000.

c. Is there a shortage or a surplus or neither?

d. If there is a shortage (or a surplus) indicate the amount of shortage/surplus.