ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:2. For the second setting, imagine that there is only a single monopolist that
sells both types of car. That is, the same firm chooses both Qo and Q1.
(a) Write down the monopolist's profits. It should contain separate terms
relating to the two types of car. For questions 2-4, leave general terms
To and T1 in your expression as in question 1(d), rather than imposing
To = 20, T1 = -20 as in questions 1(a)–1(c).
Transcribed Image Text:There are two types of car, distinguished by how fuel eficient they are. Type
O is the less fuel efficient type, and type 1 is the more fuel efficient. The inverse
demand curves for the two types of car are:
Po = 250 – Qo – Qı/2, P = 120 – Q1 – Qo/2.
(1)
Cost functions are
Co(Qo) = 50Q0, C:(Q1) = 20Q1
(2)
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