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

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

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