econ100_winter2010_PS7+AK

econ100_winter2010_PS7+AK - ECN 100B Winter10 Problem Set7...

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Unformatted text preview: ECN 100B Winter10 Problem Set7 Answer Key by Nikki Yang Q1 a. 10 2 1 10 20 2 1 10 2 Q Q Q Q Q Q ATC TC TFC=20 b. Q dQ dTR MR Q Q Q Q PQ TR 6 6000 3 6000 ) 3 6000 ( 2 c. Monopolist will set output (Q*) when MR=MC to reach profit maximization 6000-6Q=10+Q 7Q=5990 2562844 20 366368 8560 2198208 5136000 20 2 856 ) 856 ( 10 ) 856 ( 3 ) 856 ( 6000 20 2 1 10 3 6000 3432 856 3 6000 * 856 71 . 855 7 5990 * 2 2 2 2 Q Q Q Q Q ATC PQ TC TR profit P Q d.The tax will add $20 to the monopolists marginal cost (MC). 853 85 . 852 7 5970 5970 7 20 10 6 6000 t t Q Q Q Q MC MR The new price will be P = 6000-3*853 = $3441. The monopolist will receive $3441 form consumers, and pay $20 to the government, so they keep $3421 per unit. ECN 100B Winter10 Problem Set7 Answer Key by Nikki Yang Q2 a. 25 . 2246 ) 5 . 47 5 10 ( 5 . 47 5 . 52 ) ( 5 . 52 5 . 47 100 5 . 47 2 95 5 2 100 5 5 10 ) ( 2 100 100 ) 100 ( 2 Q C PQ TC TR profit P Q Q MC MR dQ Q dQ Q dC MC Q dQ dTR MR Q Q Q Q PQ TR b....
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econ100_winter2010_PS7+AK - ECN 100B Winter10 Problem Set7...

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