Question 1The market for paper is perfectly competitive and 1000 firms produce paper.Table 1 sets outthe market demand for paper.Table 2 sets out the costs of each producer of paper.a)Calculate the market price,the market output,the quantity produced by each firmand the firm’s economic profit or loss.Explain in detail.b)In the long run,what is the market price and the quantity of paper produced?What isthe number of firms in the market?Explain in detail.Table 1QuantityPrice(E perdemandedbox)(thousands ofboxes per week)3.655005.204506.804008.40350100030011.6025013.20200Table 2OutputMarginal costAverageAveragevariable costtotal cost(boxes(E per extraper week)box)(E per box)(E per box)2006.407.8012.802507.007.0011.003007.657.1010.433508.407.2010.0640010.007.5010.0045012.408.0010.2250020.70,9.0011.00(16 marks)
