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) 7362268
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.
 Spring '09
 Demsetz
 Oligopoly

Click to edit the document details