The Australian Federal Government is concerned that too high energy prices negatively affect both households’ wellbeing and business stability.
September 3, 2020
Knowledge externalities There are two power plants A and B, each selling electricity, noted e , at a price of $1 per unit.
September 3, 2020
  1. select all items below that tend to favor natural monopoly: (a) high deadweight loss, (b) economics of scale, (c) essential facility, (d) high demand, (e) high fixed costs.
  2. For each statement, answer T for true or F for false.

(a) Cournot duopoly leads to a higher producer surplus than monopoly.

(b) The deadweight Lisandro under perfect competition is zero.

(c) the inverse demand P(Q) = a-Q has a constant slope of -1, but it’s elasticity depends on output Q.

(d) Perfect competition has the highest consumer surplus (of all market structures).

(e) deadweight loss for monopoly = social welfare for perfect competition – monopoly profit – consumer surplus for monopoly.

(f) If the AC curve in decreasing in output, we have decreasing returns to scale.

3 ) Find all Nash equilibrium of the game ( you may use the underline method) :

4 ) Consider a market with inverse demand P(Q) = 32 – Q and n firms each with cost function C(q) = 12q.

(a) fine the cournot equilibrium output, industry output, price, per-firm profit, and social welfare.

(b) fund industry output, price, profit, and social welfare in perfect competition.

(c) find monopoly output, price, profit, social welfare and deadweight loss.

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