ajaz_eco_204_2012_2013_chapter_16_Market_Power_PP

Hint both intel and amd pay the same price for

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Unformatted text preview: ace identical input prices. ) ● using the same level of True or false: AMD’s “technology and management” is superior to Intel? Show all calculations and state all assumptions. Hint: Both Intel and AMD pay the same price for materials. Question 16.7 The demand for AMD is given by: ( (a) Transform AMD’s demand into the form ) ( ). You will use this model later. Show all calculations. (b) Transform Intel’s given demand model: 2 ECO 204 Chapter 16: Practice Problems & Solutions for Analysis of Firms with Market Power in ECO 204 (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. ( into the demand model ( ) ). You will use this model later. Show all calculations. (c) Use your answers to parts (a) and (b) to derive the following two demand models for AMD and Intel respectively: ● ( )● ( ). You will use these models later. Show all calculations. Use AMD’s demand model from part (a) to answer this question. Suppose AMD is a monopolist -- calculate AMD’s profit maximizing output and price. Show all calculations. (d) What would be the impact on AMD’s monopoly profits due to a hypothetical $1 increase in its marginal cost (in this question only)? Show all calculations. (e) Use Intel’s demand model from part (c) to answer this question. Suppose Intel is a monopolist -- calculate Intel’s profit maximizing output and price. Show all calculations. (d) What would be the impact on Intel’s monopoly profits due to a hypothetical $1 decrease in its marginal cost (in this question only)? Show all calculations. Question 16.8 Use AMD’s demand model from Question 16.7, part (c) to answer this question. (a) Suppose AMD is a monopolist -- calculate AMD’s profit maximizing output and price. Show all calculations. (b) What would be the impact on AMD’s monopoly profits due to a hypothetical $1 increase in its margi...
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