3. (7 points) Market demand is Qu= { 0 - b) = 7 pe [0, a] (5) p> a a, b > 0. There are n competitive firms in the market. For i 1, ..., n, firm i hires li units of labor at unit cost w > 0, which yields di 21 units of output. Here, a E (0,1). = = 7 (a) Suppose that n 1. i. Find firm l's supply as a function of p. (1 point) ii. Find the competitive equilibrium (p*, qi) for any a E (0,1). (1 point) iii. Find the competitive equilibrium (p*, qt) for a = 0.5. (1 point) (b) Suppose that n = 3 and a = 0.5. Suppose further that firm 1 is given a subsidy on production, i.e., for each unit of output produced by firm 1, the government gives s dollars to firm 1. i. For i 1, 2, 3, find firm is total cost, TC; (qi). (1 point) ii. Find the competitive equilibrium (p*, 91, 92, 93). (1 point) iii. What is the effect of s on (p*, 91, 92, 93)? (2 points) 2 > 3. (7 points) Market demand is Qu= { 0 - b) = 7 pe [0, a] (5) p> a a, b > 0. There are n competitive firms in the market. For i 1, ..., n, firm i hires li units of labor at unit cost w > 0, which yields di 21 units of output. Here, a E (0,1). = = 7 (a) Suppose that n 1. i. Find firm l's supply as a function of p. (1 point) ii. Find the competitive equilibrium (p*, qi) for any a E (0,1). (1 point) iii. Find the competitive equilibrium (p*, qt) for a = 0.5. (1 point) (b) Suppose that n = 3 and a = 0.5. Suppose further that firm 1 is given a subsidy on production, i.e., for each unit of output produced by firm 1, the government gives s dollars to firm 1. i. For i 1, 2, 3, find firm is total cost, TC; (qi). (1 point) ii. Find the competitive equilibrium (p*, 91, 92, 93). (1 point) iii. What is the effect of s on (p*, 91, 92, 93)? (2 points) 2 >