Clearly identify your name and ID in both, the question sheet and exam book, and submit both

.Show your answers only in the exam book

. Any writing in the question sheet will not be read for grading

.Answer All

.Each question is equally weighted of 10 marks

.60 minutes in length

Questions:

1

. Suppose a firm in Toronto has two markets with the following demand curve for each market,

P 1=100 ?

Q and P2=$60, and the marginal cost of this firm is MC=2Q

. Discuss the best pricing policy for this firm to

maximize its profit

.2

. Suppose the market demand for a particular product is given:

P= 10 - 0

.002Q, and the industry marginal cost is MC=4+0

.001Q

.Compare the welfares between the market structures of perfect competition and monopoly

.3

. The production function is f (L, M) = 4

, where L is the number of units of labor and M is the

number of machines

. If the amounts of both factors can be varied and if the cost of labor is $36 per unit and

the cost of using machines is $4 per machine, then

a

.Compute the total cost of producing 24 units of output

.b

.Compute the amount of output if cost constraint is limited $432

.00

4

. Suppose the cost function for a perfectly competitive firm is given that: TC = 100 + q 2

. Market

demand is Q = 10,000 - 100p

.a

.b

.c

.What could be the profit when the industry is in a long-run equilibrium position?

How many identical firms will there be in the long-run position?

Derive the long-run industry supply curve

.5

. A monopolist faces the following demand curve: Y=50-0

.5P, has the cost function that C=100+4Y,

where Y is the quantity of the product, and the price elasticity of demand is currently -3

.a

.b

.Compute the profit maximum level of price and quantity

.Compute the size of markup

.