3. Suppose there are ten identical firms in an industry. The cost function for each firm

is:

c(y) = yz

2 + wy

where y is the firm’s output of the homogenous good, and where w is the wage rate

of workers in the industry. Suppose further that w = 1.9Qs, where Qs denotes total

industry output.

(a) Find the industry supply function assuming symmetry.

(b) Suppose market demand is QD = 6 – p, where p is the output price. Find the

price, market quantity, wage rate, and total surplus in equilibrium.

(c) Now suppose that the government imposes a unit excise tax of $1. What happens

to the equilibrium price, market quantity, and total surplus in this case?Microeconomics