ps5v2q - PROBLEM SET 5 VERSION 2 Economics 201 Geoffrey...

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Unformatted text preview: PROBLEM SET 5 VERSION 2 Economics 201 Geoffrey Jehle Present all final answers neatly on these pagesplease do your scratch work somewhere else. Remember to attribute help received. 1. A profit-maximizing monopolist with no fixed costs has increasing marginal costs given by mc = 4 q , where q is the firms total output. The monopolist can sell her output in two geographically separate markets. Demand in the two markets is, respectively Market 1 P 1 = 48- 44 q 1 , Market 2 P 2 = 26- 64 q 2 , where q i is the quantity of output sold in market i = 1 , 2. Assume the firm can prevent all resale of its product between Markets 1 and 2. WARNING: Do not round until you have your answer (if then)! Cumulative rounding errors can make your final answers way off. a. How much total output does the firm produce? How much does it sell in each market? q * = q * 1 = q * 2 = b. What price does the firm charge in each market?...
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This note was uploaded on 04/26/2010 for the course ECON 101 taught by Professor Staff during the Spring '08 term at Vassar.

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ps5v2q - PROBLEM SET 5 VERSION 2 Economics 201 Geoffrey...

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