Practice_Final_Questions

# Practice_Final_Questions - C M and N ﬁrms with a marginal...

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ECONOMICS 3S03: Industrial Organization Department of Economics McMaster University Fall 2015 Practice Questions II 1 A monopolist operates in a market where there are three types of consumer. Their inverse demands are given by P H = 48 - 2 Q H , P M = 38 - 2 Q M , and P L = 28 - 2 Q L . The monopolist has a marginal cost of 2. Find what a uniform price would be and the profits the firm will make. Then find what prices and profit is under third degree price discrimination. 2 Using the same consumers from the previous question, find what the simple block pricing packages would be and the profit the firm would make. 3 Using the consumers from the previous question, decrease the quantity offered to the Low group by one unit and find the new incentive compatibility constraints. 4 There are M firms with a marginal cost of

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Unformatted text preview: C M and N ﬁrms with a marginal cost of C N . With market demand of Q = A/B-P/B , ﬁnd what quantities, price, and proﬁts will be for all ﬁrms when the ﬁrms compete under Cournot. 5 Derive marginal revenue of a ﬁrm that competes with N-1 other ﬁrms under Cournot. 6 Under a standard Cournot setting as seen in class, what happens to proﬁts if demand increases? 7 If there are N ﬁrms in a market that compete under Bertrand, what will be the equilibrium price? 8 There are three ﬁrms in a market each with a marginal cost of 10 + 2 q . Inverse market demand is given by P = 100-3 Q . Suppose that Firm 1 is dominant, it moves ﬁrst, then the other two ﬁrms simultaneously choose quantity. Find the equilibrium. 2...
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