ps4 - Department of Economics University of California Fall...

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Economics 121 Page 1 Problem Set 4 Department of Economics Fall 2004 University of California Woroch/Lopez/Sydnor Economics 121: Problem Set 4 Due: Thursday, Dec. 2 (in lecture) True/False/Uncertain: Explain your answer. 1. Selling a product below its short-run marginal cost of production is necessarily predatory. 2. Large fixed costs and difficulty in selling off capital assets will make predation less likely. 3. Vertical mergers are total-welfare enhancing. 4. There is no difference in final market outcome between an industry structure with a single vertically integrated monopolist and a structure with an upstream monopolist facing a perfectly competitive downstream. 5. Because a horizontal merger reduces the number of firms in an industry, it raises price, thus hurting total welfare. Multipart Questions: Answer each part of the below questions. 1. Kia Motors manufactures cars that are sold through dealers. The (daily) demand for Kia cars in a certain market is given by D(p) = 30 – p, and let the (constant) marginal cost of manufacturing a
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This note was uploaded on 05/05/2008 for the course ECON 121 taught by Professor Woroch during the Fall '07 term at Berkeley.

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ps4 - Department of Economics University of California Fall...

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