Question

7. Let the cost function of a monopolist be c()-100+20q. Find the market equilibrium, price elasticity of demand at the equilibrjum, profit, and DWL if (a) market demand is p-100-q (b) market demand is q-120-2p St. 8. There are two identical firms in the market. Each firm has cost function c(g)-24q and the market demand is p-60-q. The two firms are considering whether to produce at cooperative output level (cartel) or to set output level non-cooperatively (Cournot). (a) Find each firm's profit if (i) both firms choose to co-operate; 42. Ib. both firms choose not to co-operate; P3b. I ii) one firm chooses to co-operate but another firm chooses not to co-operate. (b) Based on (a), find the market equilibrium if the firms set output le ultaneously?乡136 l's 9. Customers are uniformly located along a street with unit length ( the left end is 0 and the right end is 1). Each of them wants to buy one unit of a good. The transportation cost of customers is c dollars per unit length. Firms have same production cost and the market price is fixed at some level above the production cost.
7and8

Answer 1