A monopoly has the following demand curve qi = β0 + β1pi + i; with i ∼i.i.d.N(0,σ2), i = 1,2,3,...,15 In addition, there
Posted: Wed Jul 06, 2022 6:18 pm
A monopoly has the following demand curveqi = β0 + β1pi + i; withi∼i.i.d.N(0,σ2), i = 1,2,3,...,15
In addition, there is information on the prices set and thesales obtained in the past.
Assume that the marginal cost is $10. Based on the least squaresestimators of the parameters β0 and β1,
a) Determine the output of the monopoly. Note, the monopolistwill maximize his profits when MC=IMg. The IMg function is definedas the line with twice the slope of the inverse demandequation.b) Obtain the corresponding production under conditions of perfectcompetition. According to the theory,in perfect competition equilibrium occurs when MC=P.
Q 3 3 P 18 16 7 17 6 12 10 15 15 16 13 15 4 9 15 9 15 6 8 13 11 12 18 21 7 7 10 7
In addition, there is information on the prices set and thesales obtained in the past.
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a) Determine the output of the monopoly. Note, the monopolistwill maximize his profits when MC=IMg. The IMg function is definedas the line with twice the slope of the inverse demandequation.b) Obtain the corresponding production under conditions of perfectcompetition. According to the theory,in perfect competition equilibrium occurs when MC=P.
Q 3 3 P 18 16 7 17 6 12 10 15 15 16 13 15 4 9 15 9 15 6 8 13 11 12 18 21 7 7 10 7