E462/562 PROBLEM SET 1 (Total: 100 points) Q1(10 points): List three markets that you think are imperfectly competi- tive. Which firms are major players? Is there a competitive fringe? Q2(10 points): Why do you think that the US courts have consistently disallowed any form of price-fixing agreements among different firms but have been more tolerant of market dominance by one firm? Q3(10 points): Explains what "Chicago School\" is and its contribution to the field of industrial organization. QQ4(10 points) Do you think a monopolist will ever choose a point on the demand curve where the price elasticity of demand equals -17 Why would it never be optimal to choose such a point, given positive marginal costs? Would the monopoly rather produce less or more? (Q5(30 points, 10 points each) The market demand for cellular phones 6000 50P is described by a linear demand function: QP = . Suppose that the manufacturing of cellular phones is monopolized. The monopolist has 50 identical plants to run. The market demand for cellular phones is described by 6000 50P a linear demand function: QP = _ Suppose that the manufacturing of cellular phones is monopolized. The monopolist has 50 identical plants to run. Each manufacturer has the same production costs. These are described by long-run total cost functions of TC(q) = 100 + * + 10g. The overall marginal cost function for the multiplant monopolist is deseribed by MC(Q) = 10+ /25. 1) Derive the monopolist's marginal revenue function. 2) Derive the monopolist's profit-maximizing output level. What price does th monopolist set to sell this level of output? 3) What is the profit earned at each one of the monopolist's plants