Imagine that to produce one ream of paper you need 10 trees. Say that the market demand for reams is D(p) = 50 - p. Suppose that cutting a tree costs $1 and that there are two paper-producing companies in this economy. The first company owns a forest with 500 trees, the second one owns a forest with 300 trees. Assume further that these trees are fixed amounts (i.e. after each firm chops down all the trees it owns, it has none left, and the firms cannot grow more trees). What is the market supply for reams? What is the equilibrium price and quantity of reams? Suppose that guitars are made with the same wood used to produce paper, and that demand for guitars increases. What happens to the cost of producing reams? Justify your answer. Does the equilibrium price and quantity for reams rise, fall, or remain equal after the increase in demand for guitars? Hint: You can use a picture to justify your answer. Suppose that to preserve trees the government taxes reams of paper. True or false: if the tax imposed by the government is 10% of the price of a ream, then the equilibrium price of paper reams increases by less than 10%? Hint: remember to justify your answer. Just claiming "true" or "false" will get you no points in an exam. Repeat the last bullet point but now assume that the demand for reams of paper is D(p) = 100 - p.