Firms in a competitive industry have C = q2 - 0.25nq + 9. Demand is D = 40 - 4p. A per-unit tax t = 2 is introduced. Provide the usual 2-panel analysis showing initial, intermediate and ultimate equilibria. Your diagram for the firm should show 3 MC and 3 AC curves. Your diagram for the industry should show 3 supply curves and 1 demand curve.

pur-new-sol