Question B1 Answer all parts. Suppose that a monopolist offers two different products with demand functions P1 = 56 – 4g, P2 = 48 – 2q2 The monopolist's joint cost function is C(q1, 42) = qỉ + 5q192 + q² a. Write out the monopolist's profit function as a function of q, and q2. b. Differentiate the profit function with respect to q, and q2.Explain intuitively why we take the derivative of the function. c. Solve the first order conditions using Cramer's rule. d. Use the values that you found in part c to find the prices in each market and the profit that is made by the monopolist. e. Use the second order condition for a maximum to check whether or not the values that you have computed do represent a maximum. [30 marks]

Question B1 Answer all parts. Suppose that a monopolist offers two different products with demand functions P1 = 56 – 4g, P2 = 48 – 2q2 The monopolist's joint cost function is C(q1, 42) = qỉ + 5q192 + q² a. Write out the monopolist's profit function as a function of q, and q2. b. Differentiate the profit function with respect to q, and q2.Explain intuitively why we take the derivative of the function. c. Solve the first order conditions using Cramer's rule. d. Use the values that you found in part c to find the prices in each market and the profit that is made by the monopolist. e. Use the second order condition for a maximum to check whether or not the values that you have computed do represent a maximum. [30 marks]

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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