Question: QUESTION ONE A monopolist's average cost function is given by AC = 300/Q -10+Q And its demand equation is Q + 5P = 850; where

QUESTION ONE

A monopolist's average cost function is given by

AC = 300/Q -10+Q

And its demand equation is

Q + 5P = 850;

where P and Q are price and quantity, respectively. Determine;

a. The expression for Total Revenue as a function of Q.[1.5 marks]

b. The expression for Total Cost as a function of Q. [2 marks]

QUESTION 2 AND QUESTION 3

QUESTION ONEA monopolist's average cost function is given byAC = 300/Q -10+Q

QUESTION TWO For the demand function: Q, =1004P2 +313, +0.04Ji Where P is the price of the given good, P A is the price of an alternative good, Y is income. Given that P = 3, PA =1, and Y = 2,500 a. Find the cross-price elasticity of demand. [4 MARKS] b. Intelpret the value cross-price elasticity of demand you have calculated in (a). [1 MARKS] QUESTION THREE Given a production function Q = 2505K a. Using Euler's theorem, determine whether the above functions is homogenous or non- homogenous. [4 marks] b. Comment on the degree of homogeneity and returns to scale? [1 marks]

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