Solutions to Homework Assignment 7 (Chapter 9).doc

SolutionstoHomeworkAssignment7(Chapter9). InversedemandfunctionP(Q)=-=-^2 FONC:dTR/dQ=-=0,solveformaximizingQ=2,500. P(Q)=-,500=. UndertheCournotassumption,thetwofirmstogetherproduce(2/3)Q*, withP(Q*)=-*=*=5,000. Totalquantityproduced=(2/3)x5,000=3, (1/2)x3,333=1,667units. ThepricewillbeP=-,333=. IneachfirmTR=,667=. Yes,ifthefirmsweretocooperateandeachproduceonehalfofthe monopolyoutput(whereTRismaximizedatQ=2,500).Eachfirmshould produceQ=1,250atP==,250=125,an . Largefirm'sdemandfunctionQl=Qm-Qs=81,000-200P-1,000-50P=80,000-250Pl InversedemandfunctionPl(Ql)=320-=320Ql-^2. TomaximizeprofitMRl-MCl=320--100-=220-=0 SolveformaximizingQl=100,(Ql)=320-,000=. Ql=80,000-250x280=10,. Qs=1,000+50x280=15,. MR Q P TR TVC AVC AFC SMC - 0 120 0 0 - - - 115 10 115 1150 600 60 60 60 105 20 110 2200 800 40 30 20 95 30 105 3150 900 30 20 10 85 40 100 4000 1120 28 15 22 75 50 95 4750 1500 30 12 38 65 60 90 5400 2400 40 10 90 55 70 85 5950 3500 50 110 45 80 80 6400 4800 60 130 35 90 75 6750 7200 80 . Q=50,becauseforQ>50SMC>. P==TR-TFC-TVC=4750-600-1500=2,. SinceAVCisconstantAVC=MC=5. Inversedemand