Regulation and Antitrust Policy (Econ 180)
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I. Multiple choice [2 pt each: 20 pts total]
(1)b. (2)b. (3)c. (4)e. (5)a. (6)a. (7)b. (8)d. (9)b. (10)b.
II. Problems
(1) [Tying: 28 pts]
(2) [Double marginalization with fixed proportions: 52 pts]
a. MRP = 12 - (Q/50);
b. PS = 9 - (Q/50);
c. MRS = 9 - (Q/25);
Table of Results [36 pts] | (i) Successive monopolies | (ii) Vertically integrated monopoly |
---|---|---|
Q = quantity of sauce (and pizzas) | 200 | 400 |
PS = price of sauce | $5 | |
Profit of upstream firm | $200 | |
PP = price of pizzas | $10 | $8 |
Profit of downstream firm | $400 | |
Total upstream + downstream profits | $1200 | $1600 |
I. Multiple choice [2 pt each: 20 pts total]
(1)b. (2)c. (3)a. (4)e. (5)b. (6)b. (7)a. (8)b. (9)d. (10)a.
II. Problems
(1) [Tying: 28 pts]
(2) [Double marginalization with fixed proportions: 52 pts]
a. MRP = 15 - (Q/50);
b. PS = 12 - (Q/50);
c. MRS = 12 - (Q/25);
Table of Results [36 pts] | (i) Successive monopolies | (ii) Vertically integrated monopoly |
---|---|---|
Q = quantity of sauce (and pizzas) | 250 | 500 |
PS = price of sauce | $7 | |
Profit of upstream firm | $1250 | |
PP = price of pizzas | $12.50 | $10 |
Profit of downstream firm | $625 | |
Total upstream + downstream profits | $1875 | $2500 |
[end of answer key]