ECO 260

Homework 3

Answers

 

 

 

1.         Market 1:

P₁ = 60

            q₁ = 40

 

            Market 2:

 

            P₂ = 35

            q₂ = 30

 

            If can’t price discriminate:

 

            P_M = 43.33

            Q_M = 70

 

2.         P = 50 – 7q

            MC = 1

 

            Set P = MC

 

            q^* = 7

            P^* = 1

 

            Max price for admission equals consumer surplus = 171.50

            Profit is equal to price for admission = 171.50