HW II Cartel and Game theory

HW II Cartel and Game theory - Bus 24s7 Homework II Fall...

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Bus 24s7 Homework II Fall 2008 This assignment will be due on October, 28 in class. The assignment must be typed and stapled in order to receive credit. No late assignment will be accepted unless the professor has approved an exception. Please show all work, round all calculations to two places. 1) What behavior of average cost do we associate with a natural monopoly, falling, constant or rising? 2) If average costs are falling as output expands, why does it make more sense for one firm to satisfy all market demand than for many firms? 3) When average costs are falling the forces of competition may lead to the dominance of one large firm. Why might it make sense to society to regulate this firm rather than to let it behave as any sole seller in the market? Consider the following representative firm. Equation Set 1. Total Costs: TC = 400 2q Demand p q = 150 8q Figure 1 p 150 AC 2 MC q MR D
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4) Using the equations above calculate the monopoly equilibrium price and quantity. 5)
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This note was uploaded on 02/15/2011 for the course ECON 247 taught by Professor Bradberry during the Fall '10 term at CUNY Queens.

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HW II Cartel and Game theory - Bus 24s7 Homework II Fall...

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