final review

final review - UNIVERSITY OF WATERLOO - Department of...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
UNIVERSITY OF WATERLOO -- Department of Economics -- Professor J. Cuenca Economics 201: Review Questions for the Final Examination 1. A market with the following demand curve: P + 3X = 24 is supplied by a single profit- maximizing firm whose total-cost function is TC = 2X 2 + 4X + 8. (a) What is the total- revenue equation for this firm? [Hint : recall that TR = XP ]. (b) Calculate this firm's equilibrium output and price [Hint : MR = -6X + 24 and MC = 4X + 4 ] AND DRAW A DIAGRAM TO ILLUSTRATE YOUR ANSWER TO (b). Suppose now that the firm introduces a price discrimination scheme, with a different price for each of the two halves of the total equilibrium output. (c) REFER BACK TO YOUR DIAGRAM and find the resulting increase in economic profits. [ Note : assume that the increase in costs due to the price discrimination scheme is insignificant ]. 2. A market's total demand is given by P = 80 - (Z/2). This market is supplied by a "dominant firm" and by other, relatively "small firms". The small firms' total supply is given by P = 4 Y. The dominant firm's total-cost function is TC = (X 2 /20) + (17X/9) + 10 [ In case you have no calculus:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/02/2011 for the course ECON 201 taught by Professor Vandewaal during the Spring '09 term at Waterloo.

Page1 / 2

final review - UNIVERSITY OF WATERLOO - Department of...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online