HW8_Soln

# HW8_Soln - Homework 8 Solution (Chapter 13: Oligopoly) DUE...

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

Homework 8 Solution (Chapter 13: Oligopoly) DUE : IN CLASS 20 th APRIL 2009 (Tuesday) ECON 80A Professor: Paroma Sanyal Microeconomic Theory 126 Sachar Bldg. Brandeis University (781) 736-2268 Spring 2009 psanyal@brandeis.edu Total 100 points Short Answers & Quantitative Problems Question 1 (50 points) The market demand curve is given by: P = 15 – Q. Assume there are only two firms in the market (Q = Q 1 + Q 2 ), and each has a total cost function given by: TC=3Q+6. Calculate Q 1 , Q 2 , Q, P, Profits of Firm 1 and Firm 2 and total profits in the industry for the following market structures and show the equilibrium on a graph wherever mentioned: (i) Shared Monopoly (graph) ( 4 + 4 points) (ii) Bertrand Competition (show on same graph as above) ( 4 + 2 points) (iii) Cournot Competition (show on a demand curve graph) (6 + 6 points) (iv) Stackleberg Competition (Assume Firm 1 is the leader) (14 points) Answer (i) Shared monopoly : MR = 15 - 2Q = MC = 3 2Q = 12, Q = 6, P = 9, Q 1 =Q 2 =3

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## HW8_Soln - Homework 8 Solution (Chapter 13: Oligopoly) DUE...

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

View Full Document
Ask a homework question - tutors are online