E604
Suggested Answers to Problem Set #2
(Problems 2.3, 2.5, 2.6, 2.9)
2.3. The height of a ball t seconds after it is thrown straight up is -1/2gt2 + 40t (where g is
the acceleration due to gravity)
a. If g=32 (as on the earth), when does the ball reach
Suggested Answer Key.
Problems 4.2, 4.4, 4.6 and 4.9
4.2
a. A young connoisseur has $300 to spend to build a small wine cellar. She enjoys two
vintages in particular: an expensive 1987 French Bordeaux (WF) and $20 per bottle and a
less expensive 1993 Cali
Natural Monopoly
Basic concepts
An industry is a natural monopoly if production by a single firm
minimizes cost
More technically: natural monopolysubadditivity in the cost
function
- take Q Q 1 , . . . Q J a vector of outputs, subadditivity
means that C
EC333, Spring 2013, Prof. Jordi Jaumandreu
Solutions to Problem set #3
Natural Monopoly, Regulating a Monopolist (1)
Problem 1.
a. Draw the curve (recall from Problem set #1 that AC reaches a minimum
q
at = ) Suppose both rms producing at arbitrary dieren
EC333, Spring 2013, Prof. Jordi Jaumandreu
Solutions to Problem set #5
Regulation in Practice
1.
a.
=
b.
=
=
=
1
1
1
2 2
2
1 1
1
2
2
2
()
=
=
= 105
0105
010
10
19 (02
= 105
0105) = 1
1
1
1
2
c. In the rst case = 105 and hence = (105 ) 2 = 105 2 ;
in t
EC333, Spring 2013, Prof. Jordi Jaumandreu
Solutions to Problem set #6
1.
a. Prots are 1 = (1 1 2 )1 and 2 = (1 1 2 )2 .
1
2
Calculating the derivatives 1 and 2 equating them to zero one obtains the
best response functions 2 = (1 ) 21 and 2 = 1 1 1 (the r
EC331, Fall 2012, Prof. Jordi Jaumandreu
Solutions to Problem set #4
Regulating a Monopolist (2)
Problem 1.
a. Invert demands and represent them. The demands cross for a price equal
just to the constant marginal cost of 20So demanded quantities are the sa
Economic Regulation
Outline:
Instruments of Regulation
The Evolution of Regulation
The Structure of Industries
Theories of Regulation
Instruments of Regulation
Contrary to other policies (tax, govt. expenditure, money
supply) here government restricts th
EC333, Spring 2013, Prof. Jordi Jaumandreu
February 17, Practice Midterm 1
There are three exercises. The exercises have a dierent number of questions
each and the number of points that each question is worth is detailed (total
points are 100). Take these
EC333, Spring 2013, Prof. Jordi Jaumandreu
February 20, Midterm 1
There are three exercises. The exercises have a dierent number of questions
each and the number of points that each question is worth is detailed (total
points are 100). Take these numbers
EC333, Fall 2012, Prof. Jordi Jaumandreu
Solutions to Problem set #2
Competition, Eciency and Welfare
Problem 1.
a. = and then = 1 , where stands for competition. Area of the
relevant triangle is = 1 (1 ) = 1 (1 )2 . Absolute value of elasticity
2
2
of de
EC333, Spring 2013, Prof. Jordi Jaumandreu
Solutions to Problem set #1
Microeconomics, Firms
Problem 1.
= and = + = (1+ ) = (1) where represents the
elasticity of demand. The elasticity of revenue can hence be written as =
(1) The impacts will be then re
EC333, Spring 2013, Prof. Jordi Jaumandreu
Problem set #6 .
1. Demand in an industry is = 1 Two duopolists compete " la
Cournot" with equal constant marginal cos
a. Draw the best response functions of the rms.
b. Find the quantities corresponding to the
Oligopoly and Collusion
Oligopoly: a small number of sellers, each seller takes into account
rivals current actions and likely responses to its own actions
- a frequent situation in many industries
Outline:
A short discussion on game theory (the tool to
EC333, Spring 2013, Prof. Jordi Jaumandreu
Problem set #2
Competition, Eciency and Welfare
1. The demand of an industry which is served by a monopolist is = 1
and the monopolist has constant marginal cost equal to
a. Calculate the price and quantity whi
EC333, Spring 2013, Prof. Jordi Jaumandreu
Problem set #1
Microeconomics, Firms
1. (Cabral) Consider the following values of the price elasticity of demand:
Cigarettes
0.5
US luxury cars in the United States
1.9
Foreign luxury cars in the United States
2.
EC333, Spring 2013, Prof. Jordi Jaumandreu
Problem set #3
Natural Monopoly, Regulating a Monopolist (1)
1. Assume two rms with access to the same technology represented by the
cost function () = + 2
a. Show that, if both rms must produce at all, the shar
EC333, Spring 2013, Prof. Jordi Jaumandreu
Problem set #4
Regulating a Monopolist (2)
1. A multiproduct monopolist produces two substitute goods with demands
1 = 100 1 and 2 = 120 22 . The monopolist has cost function () =
1800 + 201 + 202
a. Represent i
Regulation in Practice
We have seen a series of theoretical regulatory solutions for
the natural monopoly problem:
- Single Product and Multiproduct cases, Perfect
Information and Asymmetry of Information
- In particular:
Average cost pricing
Two-part an
Regulating a Monopolist
We are going to explore different theoretical regulatory
solutions for the cases:
- Single-product/Multiproduct
- Perfect information/Imperfect information
Next lecture will be dedicated to the practical implementation
Focus wil
EC333, Spring 2013, Prof. Jordi Jaumandreu
Problem set #5
Regulation in Practice
1. A rm subject to rate of return regulation choses labor and capital taking
into account the condition that must hold on the return to capital, i.e. by
maximizing = ( ) subj
EC333, Spring 2013, Prof. Jordi Jaumandreu
Midterm 2
There are three exercises. The exercises have a dierent number of questions
each and the number of points that each question is worth is detailed (total
points are 100). Take these numbers as a guide to
EC333, Spring 2013, Prof. Jordi Jaumandreu
Midterm 2
There are three exercises. The exercises have a dierent number of questions
each and the number of points that each question is worth is detailed (total
points are 100). Take these numbers as a guide to
EC333, Spring 2013, Prof. Jordi Jaumandreu
February 17, Practice Midterm 1
There are three exercises. The exercises have a dierent number of questions
each and the number of points that each question is worth is detailed (total
points are 100). Take these
U.S. Supreme Court
Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1 (1979)
Broadcast Music, Inc. v. Columbia Broadcasting System, Inc.
No. 77-1578
Argued January 15, 1979
Decided April 17, 1979*
441 U.S. 1
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FO
EC333: Read to pg 28
THE 2010 HORIZONTAL MERGER GUIDELINES:
FROM HEDGEHOG TO FOX IN FORTY YEARS
CARL SHAPIRO
SEPTEMBER 2010
The U.S. Department of Justice and the Federal Trade Commission recently updated their
Horizontal Merger Guidelines, 1 which build
EC333, Spring 2016, Prof. Rysman
Assignment 1
Due Wednesday, February 3
You will be assigned a group of students to work with. Turn in one set of answers for your group, signed by each
member of the group.
Big Pharmaceuticals has a patent on an important
EC333, Spring 2016, Prof. Rysman
Assignment 2
Due February 10
1.
Suppose there are two firms in the market. If they cooperate, they can make $400 each
per year in economic profit. If they both compete, they make $200 per year. If one competes and
one trie