ajaz_eco_204_2012_2013_chapter_17__18_PP

# C what are division 1 and 2s cost functions show all

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Unformatted text preview: ). Show all calculations below. (b) Calculate the optimal labor required to produce target output Show all calculations below. in Division 1 and target output in Division 2. (c) What are Division 1 and 2’s cost functions? Show all calculations below (d) Assuming Division 1’s demand function is and Division 2’s demand function is . What are the optimal Division 1 and 2 outputs and prices if there no possibility of arbitrage between the two division’s markets? Show all calculations below. (e) Assume Division 1’s demand function is and Division 2’s demand function is . What are the optimal Division 1 and 2 outputs and prices if there is a possibility of arbitrage between the two division’s markets and the cost of arbitrage is \$500? Show all calculations below. (f) Assume Division 1’s demand function is and Division 2’s demand function is st What are Division 1 and 2’s optimal 1 degree price discrimination outputs and prices if there is no possibility of arbitrage between the two division’s markets? Show all calculations below. . Question 17.4 Founded in January 2010, Dulce & Havana (D & H) designs and manufactures high end men’s jackets right here in Toronto. The inputs for D & H jackets are fixed labor (tailors), fixed capital (machines), and variable materials. Once manufactured, the jackets are sold at a uniform price to 10 individual customers in NYC; at a uniform price to 5 individual customers in Boston; and at a uniform price to the Harry Boor-son store on Bloor Street in Toronto. The marginal cost of distribution to NYC is \$300; the marginal cost of distribution to Boston is \$100; and the marginal cost of distribution to Toronto is \$0. The following graph depicts D & H’s business model: 3 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. MCDistribution = \$300 Fixed Labor Toronto Factory NYC Fixed Capital MCDistribution = \$100 Boston M...
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## This document was uploaded on 01/19/2014.

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