Question: Question one A monopolist's demand function is P = 30 0 . 75q And his average cost function (AC) takes the form AC 30 =

Question one

A monopolist's demand function is

P = 30 0 . 75q

And his average cost function (AC) takes the form

AC 30 = 9+ 0.3q

q

(i) Find the q which gives

a . Maximum revenue

b . Minimum average cost

c . Maximum profits

In each case check the second-order conditions (s. o . c).

Question two

Given the demand and supply function for three interdependent commodities

qd1 = 45 2p1 + 2p2 2p3

qd2 = 16+2p1 p2 +2p3

qd3 = 30 p1 + 2p2 p3

qs1 = 5 + 2p1

qs2 = 4+2p2

qs3 = 5+p3

Calculate the equilibrium prices and quantities of this three commodity market model

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