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When neither Case B or C occur
Impossible ⏟ found by ()
We have modeled the following problem: 29
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. ⏟ ⏟ To see how the ECO 204 RMP differs from the ECO 100 “revenue maximization rules” that
a look at the RMP whenever
(cases B and D): notice that
: Case D Case B When is ⏟? When is let take
and ⏟? When is
When is If neither cases B or C
s.t. If Supply
solution Demand Demand Let’s prove these results formally. First, let’s show that whenever
arrange the FOC to see that: unconstrained solution that . Re - ()
( ) From the envelope theorem we know that: Since we are looking at unconstrained solution we see that in cases B and D that: As such, the FOC becomes:
⏟ ) ⏟ ⏟ ⏟
30 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. This proves that whenever Next, we show that wh...
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This document was uploaded on 01/19/2014.
- Fall '14
- The Land