HW-3 Due Tues

# HW-3 Due Tues - the same price in both markets with the...

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Economics 11, Winter 2011: HW #3 Due Tuesday February 15 at beginning of class 1. Nicholson-Snyder, Problem 14.2c 2. Nicholson-Snyder, Problem 14.7 3. Bugatti is planning to sell its Veyron in the US and in Europe. This is such an unusual car that Bugatti has a complete monopoly. In the US market the inverse demand function is P = 200 - 5 Q . In the European market the inverse demand function is P = 150 - 5 Q . The cost of producing Q Veyrons is C ( Q ) = Q – same for US and Europe. (Price and costs in millions of dollars.) (a) Find the monopoly price, quantity and proﬁt in the US market (alone). (b) Find the monopoly price, quantity and proﬁt in the European market (alone). (c) Find the monopoly price, quantity and proﬁt in the combined US + European market (assuming Bugatti must charge the same price in both markets). (d) Compare the outcome – price, quantity and proﬁt – when Bugatti sells in the combined US + European market (and much charge

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Unformatted text preview: the same price in both markets) with the outcome when Bugatti separates the two markets. 4. Everything is as in Problem 3 above except that C ( Q ) = Q + . 02 Q 2 – same for US and Europe. (Price and costs in millions of dollars.) (a) Find the monopoly price, quantity and proﬁt in the US market (alone). (b) Find the monopoly price, quantity and proﬁt in the European market (alone). (c) Find the monopoly price, quantity and proﬁt in the combined US + European market (assuming Bugatti must charge the same price in both markets). 1 (d) Compare the outcome – price, quantity and proﬁt – when Bugatti sells in the combined US + European market (and much charge the same price in both markets) with the outcome when Bugatti separates the two markets. 5. Nicholson-Snyder, Problem 15.1 6. Nicholson-Snyder, Problem 15.5 2...
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HW-3 Due Tues - the same price in both markets with the...

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