ps2 - Department of Economics University of California Fall...

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Department of Economics Fall 2004 University of California Woroch/Lopez/Sydnor Economics 121 PROBLEM SET 2 Due: Thursday, October 7, 2004, 12:30 PM (in lecture) 1. True/False/Uncertain: Decide whether the following statements are true, false or uncertain, and then explain the reasoning behind your answer. a) The Bertrand Paradox will arise for a duopoly on the Hotelling line as transportation costs go to zero. b) If production exhibits learning by doing , then a scope economy arises between the product produced at different points in time. c) When firms in an industry act as price takers, their index of scale economies, s, will be less than 1 when the industry reaches equilibrium. 2. Engineering economists have found that the cost of producing small cars (S) and trucks (T) can be expressed as follows: * C(S, T) = 10 + S + 2T + ST if S > 0 and T > 0 * C(S, T) = 8 + 2T if S = 0 and T > 0 * C(S, T) = 4 + S if S > 0 and T = 0 Both S and T are measured in thousands of vehicles per year. 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 University of California, Berkeley.

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ps2 - Department of Economics University of California Fall...

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