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Unformatted text preview: Department of Economics University of California, Berkeley ECON 100A Microeconomic Analysis Fall 2009 Problem Set 4 Due: Tuesday, November 10, 2009, 11:00 AM (in lecture) True or False and Explain For each statement below, decide whether it is true or false, and explain the reasoning behind your answers in a few sentences. When appropriate, provide a diagram. 1. If a per-unit tax is imposed on a monopolist, the market price may rise more than the amount of the tax. 2. Consumer surplus and total surplus are larger under perfect competition than under monopoly. 3. Suppose that a monopolist has two factories. Factory A has a cost function of C A ( q A ) = 8 q A and factory B has a cost function of C B ( q B ) = q 2 B / 3 . The demand is given by an inverse demand function P ( q T ) = 40- q T , where q T = q A + q B . The monopolist can earn more than 300 of profit. 4. If a firm can engage in first-degree price discrimination, the lowest price it offers is equal to the marginal cost of production.the marginal cost of production....
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