ajaz_eco_204_2012_2013_chapter_16_Market_Power

# Eco 204 s ajaz hussain do not distribute now optimal

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Unformatted text preview: hus: ( ) The RMP becomes: [, () , ⏟ ⏟ Now we need to check the conditions for each of the following cases: Monopoly Revenue Maximization Problem Case C Case B Case D () When ⏟ () When When neither Case B or C occur ⏟ found by () () Now: , , ( , ) Let’s check if/when Case B will occur: () This is not ( , ) ( , ) , so that the PDS will not produce at capacity. Let’s check if Case C can occur: () This is not , ( ) , so that the PDS will produce a positive output. Since neither case B or C have occurred the solution must be Case D. To find the output set: 32 ECO 204 Chapter 16: Analysis of Firms with Market Power (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. ( , ) , ( ) Now: , ( , ) Optimal revenues are: , The Lagrange multipliers are: __________________________________________________________________________________________________ Example 2: Prestige Data Services’ Commercial Data Services: ● Hours ● = \$/hour , ⏟ Solve the RM...
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## This document was uploaded on 01/19/2014.

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