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Question 1:
i) Derive and explain Harberger's (1954) welfare loss estimates of monopolizing a perfectly competitive firm.
ii) What are the roles of advertising? Can it lead to an increase in market concentration? Discuss.
Question 2:
i) Use a simple human capital model to explain the rationale for undertaking higher education.
ii) Why do some people vary significantly in the amounts of human capital which they acquire? For instance, why is Sam a high school dropout, Bertrand a high school graduate and Gerard a Ph.D?
Question 3:
Write short notes on any three of the following.
i) Hannah and Kay's (1977) axioms of a good concentration measure ii) Dorfman and Steiner (1954) condition for optimal advertising iii) Marginal revenue productivity (MRP) theory iv) Occupational Licensure
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cars:0,2,4,6,8 tow truck:30,27,21,12,0
For each of the following scenarios, you use a SS & DD diagram to demonstrate the effect of a given shock on equilibrium price and quantity in specified competitive market. Explain
1. Cost minimizing firms must be profit maximizing as well. False, why??
Consider an upstream firm in Russia that mines iron ore at a total cost of $15 q , where q is the number of tons of ore. This upstream firm then ships ore to Germany for processi
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a monopolist faces a demand curve Qd- 120-2p and has costs given by C(Q)=20Q+100 (marginal cost is constant at $20) a. What is the optimal Price and Quantity for this monopolist?
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