Hi there, just looking for the answer to D using the information from first picture.Thanks. (d) What would To and T¡ have to be set to, for the equilibrium quantitites tobe Qo = 60, Q1 = 60? Note that while this is a bit different conceptuallyfrom what you have done before, it is simpler mathematically. Insteadof having to simultantaneously solve the two conditions, you should beable to solve them one-by-one. Remember to replace -20 with -To inthe erpression for profits from type 0, and +20 with -T in the profitsfor type 1. There are two types of car, distinguished by how fuel eficient they are. TypeO is the less fuel efficient type, and type 1 is the more fuel efficient. The inversedemand curves for the two types of car are:Po = 250 – Qo – Q1/2, P = 120 – Q1 – Qo/2.(1)Cost functions areCo(Qo) = 50Q0, Ci(Q1)=20Q1(2)respectively.1. Until question 5, we consider a “feebate" or "Clean Car Discount". Thatgenerally means there would be a subsidy on the purchase of some cars, anda tax on others, but in the following analysis it will be possible to have taxeson both or subsidies on both. In the current question, assume that there aretwo monopolies, one for type 0 cars and one for type 1 cars. Mathematically,this is equivalent to a Cournot duopoly with differentiated goods.

d. Profit for Type 0 car producers : Total Revenue-Tax- Total Cost

(d) What would To and 71 have to be set to, for the equilibrium quantitites to be Qo = 60, Q1 = 60? Note that while this is a bit different conceptually from what you have done before, it is simpler mathematically. Instead of having to simultantaneously solve the two conditions, you should be able to solve thет опe-by-one. Remember to replace - 20 with —то in the expression for profits from type 0, and +20 with -T, in the profits for type 1.

(d) What would To and 71 have to be set to, for the equilibrium quantitites to be Qo = 60, Q1 = 60? Note that while this is a bit different conceptually from what you have done before, it is simpler mathematically. Instead of having to simultantaneously solve the two conditions, you should be able to solve thет опe-by-one. Remember to replace - 20 with —то in the expression for profits from type 0, and +20 with -T, in the profits for type 1.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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