midterm2_09_ans

midterm2_09_ans - Econ 171 - Industrial Organization Second...

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Econ 171 - Industrial Organization Second Midterm Exam - 2009 Name : Section: Instructions There are 6 short questions and 2 problems. Short questions are worth a total of 40 points and the problems a total of 60 points. Answer in the space provided (no need to use it all.) If necessary use the back of the page. For TO WRITE DOWN YOUR NAME. 1. There are two consumers interested in buying two goods o/ered by a seller. Their willingness to pay for these goods are (3 ; 1) ; (1 ; 3) , where each pair of numbers gives the willingess to pay for goods one and two, respectively, for each of the two consumers. The ±rm selling these goods has marginal cost c = 2 for each good. The monopolist can increase its pro±ts by using pure bundling. True or False? Explain. 2. There are two industries with the same aggregate demand elasticity and with 10 ±rms each. In industry one all ±rms have the same market share. In industry two market shares are di/erent. Assuming ±rms are Cournot competitors, can you tell in which one the average markup is higher? Explain.
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midterm2_09_ans - Econ 171 - Industrial Organization Second...

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