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Q1. Which of the following events would increase the price elasticity of demand for Chicago Bears tickets that sell at a price of $20?
Q2. Consider a model of Cournot competition as studied in class, with 2 firms also a linear inverse demand function P(Q) = a - Q (where Q = q1 + q2 is the total quantity produced by the 2 firms also a is a parameter). The firms have different marginal costs: c1 for Firm 1 also c2 for Firm 2.
(a) Find the Nash equilibrium.
(b) Suppose Firm 1's marginal cost is larger (c1 > c2). Which firm produces more in equilibrium? Elucidate how do the quantities produced in equilibrium change if Firm 1 improves its technology, leading to a lower c1 (while c2 is unchanged)?
(c) Find the total quantity produced also every firm's profit in equilibrium. Express Illustrate what happens to these when Firm 1 changes its technology as above.
The trade or business of manufacturing dolls and accessories
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