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Intermediate Microeconomics, Winter 2008
Problem Set No 15
due: Wednesday, March 19; Thursday, March 20
To prepare for the next lecture, please read: Chapter 13, 452  457; 476478,
Chapter 14, 499504.
Q1. Suppose a monopolist faces a demand function
D
(
p
) = 100
Ap
and
suppose the monpolist has constant marginal costs of
c
. If
A
= 5
and
c
= 2
,
Find the optimal price and the optimal quantity as a function of general
A
and
c
.
Q2.
Suppose the demand function for AA and UA for ±ights between
Chicago and Detroit is
D
(
p
) = 100
Ap
. If AA and UA each choose to supply
a quantity of 30, what will be the market price? If UA chooses a supply of
q
UA
=
30, what will be the market price as a function of the quantity that AA
supplies? Given the choice
q
UA
= 30
, and given constant marginal costs
c
= 1
,
what is the optimal supply of AA? (You might want to choose
A
= 1
to make
the question easier).
Q3. Determine the strictly dominated strategies in the following games:
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 Winter '08
 Burbidge,John
 Microeconomics

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