Question: 3. Suppose that the long-run total cost function for the typical mushroom producer is given by: c(q, w) = qu 10q +100 where q is


3. Suppose that the long-run total cost function for the typical mushroom producer is given by: c(q, w) = qu 10q +100 where q is the output of the typical firm and w represents the hourly wage rate of mushroom pickers. Suppose also that the demand for mushrooms is given by Q : -1,000P+ 40,000 where Q js total quantity demanded and P is the market price of mushrooms. A. If the wage rate for mushroom pickers is $1, what will be the long-run equilibrium output for the typical mushroom picker? B. Assuming that the mushroom industry exhibits constant costs and that all firms are identical, what will be the long-run equilibrium price of mushrooms, and how many mushroom firms will there be? C. Suppose the government imposed a tax of $3 for each mushroom picker hired (raising total wage costs, w, to $4]. Assuming that the typical firm continues to have costs given by: c(q,w) : qu 10q +100 how will your answers to parts (a) and (b) change with this new, higher wage rate
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