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Microeconomics II – 2nd Module – A.Y. 2014/15
Paolo Pin
[email protected]
http://www.econ-pol.unisi.it/paolopin/
Siena, April 20th 2015
The deadline for this homework is Monday April 27th at 12pm.
Competitive markets
(a) Exercise 13.4 from Varian’s “ Microeconomic Analysis” (only points (a), (b) and (c)).
(b) Exercise 13.6 from Varian’s “ Microeconomic Analysis”.
Monopoly
(c) Exercise 14.3 from Varian’s “ Microeconomic Analysis”.
(d) Exercise 14.8 from Varian’s “ Microeconomic Analysis”.
(e) Exercise 14.10 from Varian’s “ Microeconomic Analysis”.
(f) In a small town, live 10 families; for each family the demand for electricity is Qi = 50−P .
The production cost of electricity of Monopoly Electrics (ME) is T C = 500 + Q.
(i) If the regulatory authority wants to guarantee that in this market there is not a
deadweight loss, which price would it impose to ME? Which will be the production
of electricity? Compute the consumer’s surplus and the profit of ME at such a
price.
(ii) If the regulatory authority wants to avoid that ME is losing money, what will be
the lowest price to be charged? Find the production level, the consumer’s surplus
and the profit at this price. Is there a deadweight loss?
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