HW1 - Econ 419 Industrial Organization Jura Liaukonyte Due...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 419 – Industrial Organization Jura Liaukonyte Homework 1 Due Wed, Jan 31 in class (note: extended deadline) Submit ONE version per study group. Write legibly. I reserve a right not to grade messy or illegible answers. Include a title page, listing the homework number and the names of all members of the study group. PART I – Analytical Problems 1. Assume that a monopolist sells a product with a total cost function 2 400 TC Q = + The market demand curve is given by the equation 500 PQ = . a) Find the profit-maximizing output and price for this monopolist. Is the monopolist profitable? b) Calculate the price elasticity of demand at the monopolist's profit-maximizing price. Also calculate the marginal cost at the monopolist's profit-maximizing output. c) Calculate the Lerner Index of Market power. Verify that Inverse Elasticity Pricing Rule holds at your calculated equilibrium price and quantity. 2. In a certain market in the long-run, each firm and potential entrant has a long-run average cost curve 2 10 5 20 AC
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/30/2008 for the course ECON 419 taught by Professor Jura during the Spring '07 term at UVA.

Page1 / 2

HW1 - Econ 419 Industrial Organization Jura Liaukonyte Due...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online