as5 - ECON 331 Written Assignment 5 due in class Oct. 21 1....

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ECON 331 Written Assignment 5 due in class Oct. 21 1. Suppose a monopolistic firm faces a demand function for its output which is x f p 9 p 2 and has a total cost function given by C x 3 4 x c where c is a positive constant. What level of x (or / and p ) will maximize this monopolist’s profits? Check that the second order condition for maximization holds and sketch carefully the monopolist’s profits as a function of x (or p ) paying attention to the curvature. (You can use your results from Assignment 3 to help with this.) For which values of c will the monopolist be unable to make positive profits? 2. Suppose that you discover an old oak tree on Burnaby mountain which harbours a truffle (a rare and valuable mushroom-like delicacy) beneath its roots. The truffle growsins izeaccord ingto V t ln 1 5 t where V is measured in grams and t
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This note was uploaded on 09/18/2011 for the course ECON 331 taught by Professor Heaps during the Spring '06 term at Simon Fraser.

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