ajaz_eco_204_2012_2013_chapter_16_Market_Power

Solve the pmp to find maximum market size re arrange

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Unformatted text preview: r in cases B and D: whenever unconstrained solution unconstrained solution (i.e. cases B and D) that . . We know that () Using the product rule we have: () () ⏟ ⏟ This is an especially important result for a firm with a constant elasticity demand model: if such a firm produces output then it cannot be that (see example 4 below). Summary of Monopoly Profit Maximization Problem for Case B Case D () When () When neither Case B or C occur found by () () __________________________________________________________________________________________________: Example 1: Prestige Data Services’ Commercial Data Services: ● Hours ● = $/hour , ⏟ For argument’s sake, suppose that capacity is 105% of maximum market size. Solve the PMP: ⏟ To find maximum market size, re-arrange the demand curve to get: 48 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. , , The maximum market siz...
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This document was uploaded on 01/19/2014.

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