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Problem sets for chapters 10 and 11 of a microeconomics textbook. The problems cover topics such as kinked demand curves in oligopolies, advertising strategies in duopolies, and the behavior of monopolistically competitive firms. Students are asked to analyze graphs, calculate profits, and determine optimal strategies.
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Problems for Chapters 10 and 11
0 25 50 75 100 125 150 175 200 225 250 275 300 325 350 375 0 5 10 15 20 25 30 35 40 Quantity of Widgets (Q) Price and Marginal Costs D = P Marginal Private Cost Marginal Social Cost a. What level of output will the typical widget firm produce if left unregulated? Why is this level of output “too high”? b. What is the dollar value of the external costs of the air pollution? c. What is the optimal level of output for society? TEXT, P21: #2 a,b, c. P25: #3 a, b. P26: 6 a, b, c (For #6, calculate the MCs of Pollution Abatement for each firm)
c. The optimal level of output for society is 5 widgets where price (marginal revenue) equals social marginal cost. The amount of pollution released when 5 widgets are produced is the optimal level of pollution. TEXT, P 21: