Microeconomics Answers

explain the main reasons why a competitive equilibrium may fail to exist. Illustrate using an Edgeworth box

show that for all two person games in normal form the set of rationalizable equilibria is identical to the set of strategies that remain after iterated removal of strictly dominated strategies and therefore rationalizable

Suppose a monopolist is able to segment its market into 2 consumer groups based upon known differences in willingness to pay. Group A's demand function is given by P = 90 - 2Q and group B's demand function is given by P = 70 - 0.5Q. In addition, the marginal cost of producing and selling a unit to group A is the same as the marginal cost of producing and selling a unit to group B. Specifically, MC = 10. If the firm practices second degree (or multi-market) price discrimination, then total profit will be maximized by:
i. selling Q = 20 units at a price of P = $50 to members of group A
ii. selling Q = 40 units at a price of P = $10 to members of group A
iii. selling Q = 60 units at a price of P = $40 to members of group B
iv. selling Q = 80 units at a price of P = $30 to members of group B

Suppose a monopolist is able to segment its market into 2 consumer groups based upon known differences in willingness to pay. Group A's demand function is given by P = 160 - 2Q and group B's demand function is given by P = 120 - Q. In addition, the marginal cost of producing and selling a unit to group A is the same as the marginal cost of producing and selling a unit to group B. Specifically, MC = 20. If the firm practices second degree (or multi-market) price discrimination, then total profit will be maximized by:

2. In 2006, the fees at community colleges will fall from $26 to $24 per unit. Is the demand for community college courses relatively elastic or relatively inelastic? Use the three factors to explain why. Based on your answer, what will happen to the revenues of community colleges?

Charlie loves watching Sponge Bob on his local TV station but he never sends any money to support the station during its fund raising drives. what type of market failure do the statement applies to

Supppose that a farm's production function is determined by two factors: land area (K) and labour (L). The
production function is specified as follows:

The farm's land area is 500 acres
The unit cost of capital and labour is as follows:
- land $10 per acre
- labour $500 per labour
Complete the following table:
L Q TC AFC AVC ATC
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Many retirement funds charge an administrative fee each year equal to 0.25% on managed assets. Suppose that Alexx and Spenser each invest $5,000 in the same stock this year. Alexx invests directly and earns 5% a year. Spenser uses a retirement fund and earns 4.75%. After 30 years, how much more will Alexx have than Spenser?

I have no clue on how to do this problem and I am in tears

In an oligopoli-stic market situation there is often said to be an absence of price competition. Explain
why this is so and critically review the alternatives which are often pursued by firms in this
situation.