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Unformatted text preview: Student Generated Test Questions Producer Theory Micromaniacs: A Ganesh, G. Sangha 1. Sher Khan, is a power hungry monopolist involved in the industry of making jungle books. He faces an industry demand of Q=12-P. When Khan produces each new jungle book, his total costs change by 2q. a) At what quantity will Khan produce to maximize proFts? b) Suppose Khan's patent expires and a new Frm; Mowgli, plans to enter the jungle book market. His cost curves are given as C= (q^2) + 8. Khan, angry that he no longer dominates the jungle book industry, secretly plans to engage in predatory price so that he can destroy the other Frms even before they establish a base. How can Khan use Sylos' economic model of limit price to kick out Mowgli? ¡ind qm, qs and Price. c) Suppose 5 new additional Frms Baloo, Bagheera, Kaa, King Louie, and Col. Hathi also enter at the same time as Mowgli. They however have acquired huge excess capital at a lower price and have very low Fxed costs. Predict and provide reasoning as to how this will affect Sher Khan's predatory pricing strategy? Note: No calculations are required here. Eekanamists: A Gouriannov, C Campbell 2. Since having their show cancelled in 1997, Beavis and Butthead have fallen on some hard times and need some cash. To raise money to feed their gambling addiction they've decided to start a lawn mowing company. They believe the industry runs based on Cournot's n-opoly model. After hiring an expensive economist for a ¢at fee of $125 they Fnd out that the market demand is Q=40-P/5. The cost of mowing lawns is C=100q, this is not the total cost. a) Solve for equilibrium q, Q, n and P. b) A friend told Beavis and Butthead that there is a super duper young economist. She charges only $80. Recalculate n, q, Q and P. Tekken: B Fan 3. A new oil deposit has been found in northern Canada, A new town called Benacedeco has been built there. There is one oil company entered the town and they operate at the same production function x = 80L - 0.5L^2. They all sell to the same oil market and the current oil price is 100$. There's also another big company here in the town selling groceries. It has monopoly power in the town and faces a demand of P = 100 - Y and production function of Y = 5L. All the 4 companies hire in the new town where the labour supply is w = 2L. There's another peaceful village nearby and people only need groceries here. __________________________________________________________________________________________________________________ Student Generated Test Questions on the Theory of the Producer from Summer 2010 The groceries company is a monopolist with market demand Q = 140 - P. The company has a production function of Q = 5L and the labour supply is w = 3L. Determine whether the people in the peaceful village will be attracted by the new town. Provide labelled diagrams for both town's labour market. (assume the two towns are in different markets) RISE: C Lei, J Zhou 4. Qbid is a beauty salon for pet and it has a monopoly power with the demand given Q= 200-P and a...
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This note was uploaded on 03/23/2011 for the course ECO 200 taught by Professor Bailey during the Spring '11 term at University of Toronto.
- Spring '11