Econ805mid00

Econ805mid00 - The Ohio State University Department of...

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

View Full Document Right Arrow Icon
The Ohio State University Department of Economics Econ. 805 Prof. James Peck Winter 2000 Midterm Examination Directions : Answer all questions, show all work, and label all diagrams. (1) 25 points A monopolist has many potential customers, represented by the interval, [0,1]. For customer x ! [0,1], consuming one unit of the product provides a benefit of v, but the customer must pay a transportation cost of tx to purchase the product, where t is a positive parameter. The monopolist has a constant marginal cost, c, and no fixed costs. Assume that customers are uniformly distributed across the interval, [0,1], according to the density function, f(x) = 1. In other words, if everyone in the interval [0,x] purchases, the monopolist sells x units of the product. Also assume the following: assumption 1: (v-c)/2 " t " (v-c). (A) Suppose that the monopolist must charge a constant price, p, but that it can also offer to pay a “transportation subsidy” to its customers, as a function of their location, denoted by s(x). That is,
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 07/17/2008 for the course ECON 805 taught by Professor Peck during the Spring '08 term at Ohio State.

Page1 / 2

Econ805mid00 - The Ohio State University Department of...

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