Homework-8

# Homework-8 - Econ 501 Homework Assignment 8 No need to...

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Econ 501 Homework Assignment 8 No need to submit 1. BB 11.20 Market demand is P = 64 – Q/7. A multi-plant monopolist operates three plants, with marginal cost functions: 11 1 22 2 33 3 ()4 ()22 ()6 MC Q Q M CQ Q M Q = =+ a) Find the monopolist’s profit maximizing price and output at each plant. b) How would your answer to part a) change if MC Q = . 2. BB 12.6 Fore! Is a seller of golf balls that wants to increase its revenues by offering a quantity discount. Assume that the demand for Fore!’s golf balls is P = 100 – Q and its marginal cost is MC = 10. Suppose that Fore! sells the first block of Q 1 golf balls at price P 1 per unit. a) Find the profit maximizing quantity and price per unit for the second block if 1 Q = 20 and 1 P =80? b) Find the profit maximizing quantity and price per unit for the second block if 1 Q = 30 and 1 P =70? c) Find the profit maximizing quantity and price per unit for the second block if 1 Q = 40 and 1 P =60? d) Of the three options in parts (a) through (c), which block tariff maximizes Fore!’s total profits?

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Homework-8 - Econ 501 Homework Assignment 8 No need to...

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