07 Jun Question Econ 106P: Problem Set 1 Yingju Ma Aug 11, 2015 (Due on Thursday, Aug 20, 10:45am.)
Question
Econ 106P: Problem Set 1
Yingju Ma
Aug 11, 2015
(Due on Thursday, Aug 20, 10:45am.)
No Late Submission Accepted.
You are encouraged to work as teams with 2-3 members, but please submit your own solution.
On the top of your answer sheet please show your name, UID, and whom you work with.
1. Two-Part Tari
Consider a monopoly rm and two consumers 1 and 2. The consumers demand functions are
P1 = 12
q1 and P2 = 10
q2 and the monopolys cost function is C(q) = 2q. Assume that the
monopoly uses a two-part tari pricing scheme.
A. What is the monopolys prot-maximizing quantity if it only faces consumer 1? What is the
resulting prot?
B. Assume that the monopoly faces both consumers. What is its prot-maximizing two-part tari
scheme if it needs to ensure participation (i.e. both consumers will buy something)? What is
the resulting prot?
C. Assume now that the monopoly faces 5 consumers with the same demand function as consumer
1, and one consumer with the same demand function as consumer 2. Would the monopoly
rather exclude the second type of consumer (i.e. set a pricing scheme such that the second
type would not buy anything)?
2. Joint Cost Production
Suppose a monopoly rm produce two nal products with same raw materials, the same as the
example showed in Lecture 2. Lets assume product 1 becomes more popular due to a change of
consumers taste. Then the demand for product 1 is lager than before, say P1 = 300
demand of product 2 does not change, P2 = 100
q1 . The
q2 . Firm has the same cost function: C0 = 30q0 ,
C1 = 10q1 , C2 = 4q2 .
A. Solve for rms optimal production plan.
B. Find the production plan that maximize the social welfare.
1
C. Compare the rms solution you nd in Part A with the solution we have in the slides, try to
interpret the dierence of these two results, with economic intuition.
3. Vertical Market Separation with Competitive Manufacturer
Consider a vertically separated market with the distributor as a monopoly in the retail market, but
with the manufacturer as a competitive rm. The demand function of the retail market is P = 20 q,
and the manufacturers cost function is C(q) = 4q.
A. What is the demand function faced by the manufacturer?
B. What is the wholesale price?
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.