EC332, Spring 2016, Prof. Jordi Jaumandreu
Problem set #8
Price Discrimination
1. (Cabral) A market consists of two population segments, A and B. An
individual in segment A has demand for your product = 50 An individual
in segment B has demandfor your pro

EC531, Spring 2016, Prof. Jordi Jaumandreu
Solutions to Problem set #3
Monopoly, Dominant firm and Almost Perfect Competition
Problem 1.
a. You can solve ( 1)125 for the optimal price and you will obtain
= 5 (see problem 1 of Problem set #1) Alternativel

EC332, Spring 2016, Prof. Jordi Jaumandreu
Problem set #7
Product Dierentiation
1 The only two available laundries ( and ) are located at the two extremes
of a linear street one mile long where they live a lot of students. The density
of students is the s

EC332, Spring 2016, 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.

EC332, Spring 2016, 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

EC332, Fall 2015, Prof. Jordi Jaumandreu
Practice Midterm 2
There are four 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 gu

EC332, Spring 2016, Prof. Jordi Jaumandreu
Problem set #6
Collusion
1. (Cabral) In a market with annual demand = 100, there are two firms,
A and B, that make identical products. Because their products are identical, if
one charges a lower price than the o

EC332, Spring 2016, 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 = 12 (1 ) = 12 (1 )2 . Absolute value of elasticity
of

EC332, Spring 2016, Prof. Jordi Jaumandreu
Problem set #6
Collusion
1.
a. Since product is homogeneous and firms have not capacity constraints the
"one shot" Nash equilibrium is = = where is the constant marginal
cost.
b. The price that will maximize indu

EC332, Spring 2016, Prof. Jordi Jaumandreu
Problem set #4
Regulation
1. The cost function of a monopolist is () = 375 + 20 and the industry
demand is = 100
a. Calculate the ouput and losses of the monopolist if the regulator would
force it to produce at

EC332, Spring 2016, Prof. Jordi Jaumandreu
Problem set #5
Oligopoly Competition
1. Two firms compite in prices in a homogeneous market with demand ()
Both firms have equal constant marginal cost Show the Bertrand equilibrium.
Now suppose that one of the f

EC332, Spring 2016, Prof. Jordi Jaumandreu
Problem set #3
Monopoly, Dominant firm and Almost Perfect Competition
1. (Cabral) After spending 10 years and $1.5 billion, you have finally gotten
Food and Drug Administration (FDA) approval to sell your new pat

EC332, Fall 2015, Prof. Jordi Jaumandreu
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 numbers as a g

EC332, Fall 2015, Prof. Jordi Jaumandreu
Solutions to Problem set #7
Product Dierentiation
Problem 1.
a. A straight line with intercept 3 at the axis corresponding to laundry
and slope 2
b. = 3 + 2 and = 3 + 2(1 )
c. The part of the street at which In th

EC332, Spring 2016, 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