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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 mushroomlike 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.
 Spring '06
 Heaps

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