Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 14, Problem 14.13P
a)
To determine
To calculate:
b)
To determine
In case the question requires us to calculate the quantity, price, and profit while considering the shrouded charges.
c)
To determine
To calculate:
Consumer surplus using results from part b.
d)
To determine
The welfare and maximizing level of shrouding.
e)
To determine
The welfare maximizing subsidy and the distributional consequences of the same.
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A movement along an economy's production possibility frontier with output on one axis and environmental
quality on the other shows that:
technological improvements may lead to a sustainable economy with higher consumption in the future
and better an improved environment.
producing more goods and services lowers environmental quality.
producing more goods and services raises environmental quality.
a high use of natural resources to produce more goods and services today may lead to an unsustainable
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=
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12. Recall the market setting in Question 3, where
the demand curve is P = 10 – 2Q, and mar-
ginal cost is c 2. Now suppose that two
firms, numbered 1 and 2 compete over this de-
mand curve. They produce quantities Q₁ and
Q2, hence total output is given by Q = Q1+Q2.
The best response function of firm 1 to firm 2,
labeled Q₁ = B₁ (Q2) is given by
(a) 2-2Q2
-
4
(b) 2-Q2
(c) 2 – 02
Q2
Q2
(d) 2-
(e) 2-Q
4
13. In the previous question, the Cournot-Nash
equilibrium quantity produced by each firm is
(a) 1
(d) 2
(b)
3
2
(e)
52
(c)
43
3
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