The market for bagels in New York City is perfectly competitive. In New York City, the daily demand for bagels is Q_d - 20,000 - 5,000P, which is graphed as D in the figure below. The industry supply of bagels in NYC is Q_s = -4,000 + 10,000P, which is graphed as S in the figure.

a. What is the market-clearing price of bagels in competitive equilibrium? How many bagels are bought and sold daily in NYC? (You can solve mathematically using theequations for demand and supply, or you can use the demand and supply lines in the figure, which are drawn precisely to scale.)b. Explain why the NYC bagel market is expected to achieve productive efficiency in competitive equilibrium.c. Suppose that NYC bagel businesses charged a price of $2.40 and sold 8,000 bagels per day. Explain carefully why society would benefit from an increase in bagel production.d. Suppose that NYC bagel businesses produced 14,000 bagels per day and charged a price of $1.20. Explain carefully why society would benefit from a decrease in bagel production.e. How does the market-clearing price found in part a serve to ration bagels to the consumers who place the highest value on them?f. Does the NYC bagel market achieve social economic efficiency? Why?

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4.00 3.00 2.40 S 2.00 1.80 1.20 1.00 D 5,000 10,000 15,000 20,000 Quantity of bagels (per day) Price of bagels (dollars)