Pset 1

CHAPTER 2
I
3 Supplycurvefor perfect competition p Me
4aFor monopoly solve Mr me to find Q Plug a in original demand function

9bSlope
P
II
4C LI
5 DWI in monopoly IxLPMC x a a

CHAPTER
3
I Cry can be affected by mergers Higher theCry HMI more concentrated is the industry
4 P Mc are always positive
To maximize profit operate at P2MC hence LI is always 1
For a monopolist since LI is always I m elasticity I LI TI I
OTHER

HHI weighs market shares ofLarger enterprises more heavily and takes all firms into consideration

Cry often gives samevalues and only considers top 4 firms

Pset 2
1 Market supply Sca n x q individual supplycurve

2 a Minimum Efficient Scale S Aneta I

2bEconomies of scale exist it s I for fixed output range
3 a RAC q If RAC q o global economies of scale exist
S Tiding
490
I imply globaleconomies of scale
3b So 15 70 implies economies
of scope does exist

4
CHAPTER 5
2 Cannot tell if
a firm is price discriminating unless information about costs andme is given
3 a Find price ranges show respective Q functions
3b If charging singleprice always check pricerange if P is given use appropriate demandfunction
If asked to charge single price always choose combined demand function and show why it holds

invalid for other functions

max topay p a
es Yax
w illingness

it LP me a
4 Price discrimination usually increases total surplus
5 When charging single price show invalid solutions price ranges
when combining demand function checkforkeyterms like half
 Pset 3
CHAPTER 7
1 It Paa Lectve
Ida 0 to find Q P
3 If serving wholemarket natl It to find no of shops
p V tan
check for pt p VE p for partial market

MARKET PERFORMANCE
P
Averaging the Lerner index LI spst
WELFARE Loss in RELATION
To SALES
e
If I PBI awe Iz LI

for monopoly Yat I et

SunkCosts
Fixed costs are considered sunk in shortrun
t
Greater thesunkcosts the market structure NEVE
SCALE Economy Index
my aggggniated

PRACTICE MIDTERM

I
2 So o for economies of scope
RACLa so shows global of scale and quantityrange
economies

scaleeconomy index S I for economies of scope Makesure to puteverything in Q terms

3C Put profit equation in terms of 2 find optimal z by 12 0
3d When maximizing surplus use the general form of equation P 21A a Az az
Calculate P in terms of A Z
MRtofind Q
Put it function in terms of A Z and find 2 in terms of A by Ez o
1
Ts 32Pa TC Put in terms of AZ to find index 2 by 2 0
4 Ur tr t V
index 0.5 for n I use In rule to find index