section4_15Oct08_Exam

5 consider the original situation suppose the

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Unformatted text preview: e market? Ho w do the seller and buyer prices change as a result of this subsidy? 5. Consider the o riginal situation. Suppose the government decides to subsidize the buyers by a per unit subsidy of $2.00 . Ho w will this impact the equilibrium price and qu antity in the market? Ho w do the seller and buyer prices change as a result of this subsidy? Question 4 (HW3, question 3) Co nsider t h e f oll owing oligo p olis ti c i ndus t r y c o m p os ed o f two fi r ms (q 1 and q2 ) wh o face t h e f oll owing ma r k e t de ma nd fun c t i o n : Q = 200 – 10 P W h e r e Q = q 1 + q 2 = m a r k e t ou t pu t , a nd P = ma r k e t p ri ce 1. Assume the two firms collude on setting price and output. Wh at is P* and Q* in this case assuming that the marginal cost (MC) fo r both firms is 1. 2. Show what the equilibrium is fo r the Cournot model, where the marginal cost for the t wo firms is: MC1=1 and MC2 =2. AEM 4150 review section 15 Octob er, 2008 Question 5 (HW 4, question 2) Consider the following regression output 1. Find the price elasticity of coke d emand (i.e. EDp fo r coke). Interpret its meaning 2. Find the elasticity of coke d emand with resp ect to AGE2044. Interpret its meaning 3. Do we find evidence that sho ws juice advertising affect s coke d emand ? Explain...
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This test prep was uploaded on 02/20/2009 for the course AEM 4150 taught by Professor Kaiser,h.m. during the Fall '07 term at Cornell.

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