Question

1.    The following are the marginal cost and marginal value equations:

MarginalValue(DemandCurve)= P = 195-6Q

MarginalValue(SupplyCurve)=P=45=4Q

a.    Using these curves, estimate the equilibrium price and quantity assuming a perfectly competitive market. (4 points)

 

b.    Estimate the equilibrium price and quantity assuming these curves represent what a profit maximizing monopolist faces. (4 points)

 

c.    Estimate the equilibrium price and quantity assuming these curves represent a profit maximizing monopsonist. (4 points)

 

Answer 1

$$Q=15$$

$$p=105$$

$$\pi=10Q^2-150Q$$

$$\frac{\delta \pi}{\delta Q}=20Q-150$$

$$Q=7.5$$

$$\pi=562.5$$