DiagPrblms - 2 Marginals and such 1 Give a firm’s...

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Industrial Organization: EC460 Spring 2009 Instructor: Thomas D. Jeitschko Instructions These questions are designed to give me information on students’ backgrounds in IO. The work you do on this will not affect your grade in the class. 1 A perfectly competitive market Consider a market in which demand is given by P = 100 - 2 Q and supply is given by P = 10 + Q . 1. Depict the market in a diagram. 2. Calculate the market equilibrium. 3. Calculate Consumer Surplus and Producers’ Surplus. 4. Redo the above exercises if a sales tax of T = 9 is imposed on the market. 5. Identify in your diagram and calculate the dead weight loss in the market due to the tax.
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Unformatted text preview: 2 Marginals and such 1. Give a firm’s revenue function if demand for its product is given by p = 10-q . 2. What is this firm’s marginal revenue? 1 3. Suppose a firm’s cost function is C = 2 Q 2 . What is its marginal costs, MC ? What is its average cost, AC ? 4. Suppose a firm’s cost function is C = 10 Q . What is its marginal costs, MC ? What is its average cost, AC ? 3 Monopoly Consider the following market demand: P = 24-Q . The cost of producing the good is given by C = Q 2 . Calculate output, price, consumer surplus, profit and deadweight loss, if the market is supplied by a monopolist. 2...
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