ps30 - Economics 100C Practice Problem Set 3 Perloff...

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1 Economics 100C Practice Problem Set 3 Perloff Chapter 12 Questions/Problems: 24, 39, 46 Additional Problems 1. Why do firms place ads with coupons in the paper, instead of simply offering a sale price in the same ad? 2. A monopolist has the cost function C ( Q ) = 2 Q . The market inverse demand in one market is given by P 1 ( Q 1 ) = 60 – 2 Q 1 . The market inverse demand in another market is given by P 2 ( Q 2 ) = 60 – 4 Q 2 . Arbitrage between these markets is not possible and the monopolist is free to charge different prices in these two markets. a. What is the monopolist’s profit function? b. Assuming no shutdown, find the monopolist’s profit maximizing price and quantity for each market. c. How do we know the monopolist would be no better off if she was forced to charge a uniform price? d. Which consumers would be better off if the monopolist was forced to charge a uniform price? Which would be worse off? 3. Krusty produces special skits on the internet at no cost. His cost function
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This note was uploaded on 10/21/2010 for the course ECON 1530 taught by Professor Ohly during the Spring '10 term at Dartmouth.

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ps30 - Economics 100C Practice Problem Set 3 Perloff...

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