1. Suppose honey is produced in a beehive using bees and sugar. Each honey producer uses one beehive which she rents for $20/month. Producing q gallons of honey in one month requires spending 3q dollars bees, and 3q2 dollars on sugar.
a)What is the total cost of producing q units of honey for an individual honey producer in a given month?
b) What is the average cost of producing q units of honey per month for an individual producer for a given month?
c) In general, if the total cost of producing honey is a + bq + cq2, then the marginal cost of producing honey is b + 2cq. Assuming each honey producer operates as a price-taker, what is the monthly supply curve for an individual producer?
d) Let Q be the total market supply, and q is the supply of an individual firm. Therefore, q = Q/n where n is the total number of firms in the market. Suppose the demand for honey is given by Q = 243-3P. Also, suppose there are 60 honey producers in the market. What is the equilibrium price of honey?
f) How much profit does an individual producer make in a month? Is this a long-run equilibrium? If the answer is yes, simply state that it is a long-run equilibrium. If the answer is no, explain whether or not the equilibrium price will rise or fall.