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Unformatted text preview: CDistribution = $0 Materials Inputs T. O. Jackets
Manufactured D & H manufactures jackets according to the production function: Here is number of jackets manufactured, is fixed labor, is materials, and is fixed capital. Currently, in 2010, the
Toronto factory currently employs 32 tailors (
) who work on 8 machines (
) D & H hires tailors and purchases
materials from competitive markets. D & H purchased the machines in January 2010 for $100 each and the machines
have a lifetime of 20 months.
In each month: D & H has signed a 1 year contract with Harry Boor-son: in each month of 2010 D & H will sell Harry Boor-son 20 jackets
a month at a fixed price of $100. This contract expires in December 2010.
Label the NYC market “market 1”, the Boston market “market 2” and the Toronto market “market 3”. The following
exhibit contains some key figures for January – March 2010: Units Sold in NYC:
Units Sold in Boston:
Units Sold in Toronto:
Toronto Revenues: Dolce & Havana: January – March 2010
4 ECO 204 Chapter 17 & 18: Practice Problems & Solutions for Firms with Market Power: Business Apps and Price Discrimination in ECO 204 (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. Available (Unused)
Number of individual
customers in NYC
Number of customers
individual customers in
Boston 50 40 50 10 10 10 5 5 5 (a) Show that the NYC market demand curve is
2010. Show all calculations and state any assumptions.
(b) Show that the Boston market demand curve is
2010. Show all calculations and state any assumptions. and from this calculate the price elasticity in March and from this calculate the price elasticity in March (c) Show that the monthly cost function for manufacturing the target output is: ()
[You will need this cost...
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- Fall '14