Stoll's Pasty Farms has contracted you to do an economic analysis of the regional market for pasties and you have been operating under the assumption that a pasty is a pasty is a pasty - in other words, one pasty is just as good as any other. Recently completed, your study of the regional market for pasties was carefully done and resulted in the following estimates for the annual demand and supply curves: P = 2 + 10Q and P = 110 - 8Q where Q is expressed in thousands of boxes and price is in dollars per pasty box (if you really want to know, a box contains a Yooper dozen of pasties). Given this information, Stoll's Pasty Farms would like you to answer the following questions:
- What price should they expect, being a single pasty farm in a large market?
- How many pasties in aggregate will be sold in the regional pasty market?
- What is the magnitude of economic surplus in the pasty market? And
- How is economic surplus distributed among consumers and producers?
[NOTE: Show your detailed calculations and illustrate your conclusions using a carefully labelled, equilibrium diagram to show each of parts "a" to "d" of your answer.]