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# Test review - 2 l g l Mathematically prove that a perfectly...

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Unformatted text preview: 2 l g l. Mathematically prove that a perfectly competitive firm will maximize profit by } producing a level of output y such that price equals marginal cost. (5 marks) " F toxfc; mi w’ﬂ”ﬂ/ O 2. Demand for a good y is given as y = 250 - .8p. What is the elasticity of demand when px= \$100 ? (5 marks) %: Egg“ f5»: loo) a: [9’0 g g ; ,, #fo l n....m___..d;.._‘_....~.._..._-._m._a ,, J 3. A perfectly competitive steei producing tirm’s short run cost function for tonnes of steei. y. is \SRTC =40y+ 2y2+ 5 Market demand is y = 1000 — 15p. There are 100 identical firms‘in the industry. a} Derive the market supply curve. (6 marks) 1- {Erin/w: HO" %6l;F . Li “' W0 3 r, taut/Z? [O 1% (“Avg [email protected] iDD(,g-~\O 7 9500? 5 L40? ﬂ 372,40 13:90 ‘8? s («dot o) What is the firm's profit? (3 marks) for/it: HOt Dita, * 3 ﬂ : “10+ twee + 2:} : SQ. é _ /‘ - (Afﬂqus : ng(5_p’§;> 1 m 43} (01/3 it: a d) What will be the long run equilibrium price in the industry? (5 marks) ask {M AT: '2_ :0 legal 3 if f? 6) Arc-s He + LEM) f}; “in 4. in a competitive market, demand is given as y = 1000 — p and supply is given as y = p. The world price of y is \$300. The government imposes a tariff of \$100 per unit ofy that is imported. a) How much is imported once the tariff is in place? (3 marks) V 36.50% T : if” \ gag : e W K _ _ @s‘ 2 [4/30 1 WWQH 9w b) What is the tariff revenue collected by the government? (2 marks) \$4” 2&0le1 2000-0 ‘ / o) What is consumer surplus with the tariff in place? (2 marks) 9 CS: ﬂLOOWw) 7 (/5723 mm WW0 [900400 i i i i i i i d) What is the deadweight 1033 due to the tariff? (3 marks) pm : éouvboo-D) 1' \$0139) C3130) % 60 MD I B. A single-plant monopolist supplies two markets. The demand in each market is l Market A: p = 80 — 5y Market B: p = 180 m 20y. The firm's total costs of production are TC = y2 + 40y + 50. a) Ifthe firm can price discriminate, what are prices and quantity supplied in each market? (10 marks) WAC:- 1'90 -. -—- O WWiq-T 3‘0”le mqﬂb'tz: v o ; r w 2‘20 wit/1%: a: 4.3,-.035’1/1412. a . : gmiﬁa +<—{.s“--_oz.s"m'W = mg... ,lzrm ‘3‘”7" a 3-;- /2.5— .9357; #:7— 1w * 9— mamnc % lao— 8/7 : 23 +70 :10 ﬂ 403:9? 5 I'M/Zf— {00’6’(6)=\59- Mu a» \$2: 8040:; MW 5-", {as m #05, my; \$18 419 : I}? (y‘aQ-‘K 3’3 3- 5418) p57 larva/at" ’20 6 b) If the monopolist could not price discriminate, what would its profit be and what would it do in the long run? (5 marks) a Mr [#:90'53 far/\$03207 {Ian-W’P wag/gout: f Mmﬂp "3/3 4"‘0 P gg/e-Jp ¢€—.o€‘p it '15... .1470 .?\$lo : 9:2; Pz/O'IQ ~47 0.11”? 7C}. P2 sz ﬂz'rc’ ; mm - (42+ 40 (w *9) BONUS: What are Professor Holmes” cats’ names? .0 m .. ma: i""" a? IW" “Eva-Hz 2‘3 93 a» so (JO—'9 MEI—‘3‘? A I:- TC= Lib/‘3 13+ ‘15}: It}; PKG”: I 3 “612-9 {a} :20 165,39 . (3’7'11‘5‘70 ‘3520 7T, 2 ) ...
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## This note was uploaded on 06/18/2011 for the course ECON 2X03 taught by Professor Jamesbruce during the Fall '10 term at McMaster University.

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Test review - 2 l g l Mathematically prove that a perfectly...

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