Midterm #3 (100pts)
Monopolistic competition (#1 - 20pts)
1. (original) Cournot model with free entry can be thought of as a model of monopolistic
competition with representative consumer. Inverse demand is given by , n firms compete by
17 Feb. 2010
12. . I would expect entry in the long-run.
16. The cost of the subsidy is 8.67. If the government were to take it out of the profits of the
B would be lef
19 Feb. 2010
. This is assuming that both firms operate separately, and each incurs the
fixed cost of 30. Hence, for total profits, 60 was subtracted rather than 30.
2. If firm A pr
Homework #2. Perfect competition.
Market demand for _ is given by , and its cost function is given by
1. Derive short run firms supply function
a) Find profit maximizing quantity as a function of market price
a.i) Write the short-
Homework #6. Game Theory (10pts)
1. Find all pure strategy Nash equilibria in the following game, or show that none exist
a. Draw arrows representing each players choices
b. Show equilibrium (or equilibria) A,A B,B
29 Mar. 2010
and per-unit price=1.
The monopolist could either sell 4 or 8, so, to answer this question, the profitmaximizing price must be found for both 4 and 8 units, and those
profits must be
compared to de
1. (10 pts) Cost function of producing umbrellas is given by .
a) Is it a short run or a long run cost function? How do you know?
b) What is the fixed and variable cost?
c) At what quantity average cost is
Midterm #1 will take place in class. The midterm will contain questions worth about 105 points to be
counted out of 100. The midterm #1 will cover cost, perfect competition, and monopoly. Dominant firm
will not be covered on the tes
Midterm #2 (100pts)
Model comparison and general questions (20pts)
Assuming two firms have the same constant marginal cost, and some positive fixed cost,
both firms produce a homogeneous product, and face a linear demand
Under what type of m
Types of questions for the quiz on Friday, January 15th. (5pts)
Find derivatives of the following functions with respect to :
1. , , ,
Find the logarithm of the following expression:
It is individual 5 minute quiz
You can u