Homework Answers
Q5) option D)
no CE will exist,
Q6) option b)
if Q = 2.5, P = 8-2.5 = 5.5,
π = (5.5-3)*2.5 = 6.25
.
If Q = 1.5, P = 8-1.5 = 6.5,
π = (6.5-5)*1.5 = 2.25
.
Q = 2, P = 6, MC = 5
π = (6-5)*2 = 2
Maximum π, if Q = 2.5
Q7) option D)
no Utility function exists for lexicographic preferences l
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