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Suppose that all firms in a constant-cost industry have the following long-run cost curve: c(q) =...

Suppose that all firms in a constant-cost industry have the following long-run cost curve: c(q) = 3q2 + 100q + 75 The demand in this market is given by QD = 1280 -2p. To produce firms need to have a permit and there are only 60 permits

a. Derive the supply curve in this situation. Find the market equilibrium price and quantity with the restriction

. b. If firms are allowed to buy and sell these permits in an open market, what will be the rental price of permits? Will firm’s that own permits make profit?

c. Due to deregulation policy of the new government the permit requirement in this market has been abolished. What will be the new price in this market? What will be the market equilibrium quantity?

d. How much deadweight loss is generated by the permit system? Show your work

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