1.
A single seller of salt in Assumption Land has a constant marginal cost of £50
per tonne and faces the following inverse demand curve
P = £100 - Q (where Q = tonnes of salt sold daily).
Is the equilibrium price and
quantity sold in this market
2.
If the salt market in Assumption Land was perfectly competitive the equilibrium
price and quantity would be
3.
What is the size of the deadweight loss associated with monopoly in question
1?
4.
Now assume that a second seller (Firm 2) enters the salt market with identical
marginal costs of £50. If both firms act as naive Cournot oligopolists,
the reaction curve of the original seller (Firm 1) could be represented by which
of the following
5.
What are the Cournot equilibrium price and quantity for Question 4.
6.
The demand for a monopolists services is given as P = £100 - 2q and they
have constant marginal costs of £16 with no fixed costs. What would their
total profits be if they could practice perfect price discrimination (i.e. first
degree price discrimination)?
7.
Assume that the organisers of a concert have noted that the general public have
a different demand curve to that of students. The demand curve for the general
public is Qp = £23400 - 900Pp and the demand curve for Students for this
concert is Qs = £2800 - 200Ps. How much less will students pay?