Question 1: Score 5/5


Comment: Things you have to write down first are: TR = 1000Q4Q² MR = 10008Q TC = 1004Q+2Q² MC = 4+4Q Question 1.1: For equilibrium we need MR=MC. Solve this and you
will get the answer. Question 1.2: We have a quantity Q* from question 1.1, so we can
calculate the price associated by doing P(Q*) Question 1.3: Drawing graphs makes it a bit easier in this case. Vertical length = P(0)P*, which is 10001996/3 =
1004/3 Horizontal length = Q* = 1004/12 Do 0.5(horizontal*vertical) = 0.5 * ((1004/3)*(1004/12))
= 126002/9 Question 1.4: If he can practice perfect price discrimination he
will continue until P=MC So just solve P=MC, the value you get for Q is the
answer. Question 1.5: First off, I do not agree with the answer that they
want me to give. Under first degree price discrimination the CS would be 0. Filling in 0 is marked as incorrect however, so this
probably is a test mistake. But if you still want points, the way to
calculate the (nonexistent) CS is as follows: Fill in the Q you had in 1.4 into P to finds its
value. Using the same logic as with 1.3 you finally get: 0.5(1000P)*Q* 

Question 2: Score 2/2


Comment: Things you have to write down first are: TC (ATC*Q) = 105Q+4Q² MC (TC’) = 5+8Q
Q=Q1+Q2 TR1 (Q1P1) = 190Q15Q1² TR2 (Q2P2) = 190Q215Q2² MR1 (TR1’) = 19010Q1 MR2 (TR2’) = 19030Q2 For the first question solve MR1=MC, using Q=Q1+Q2 You will either get Q1 as a function of Q2 or the reverse. Then do MR2=MC, again using Q=Q1+Q2. Replace Q1 or Q2 with the function you found earlier and you will find a
value. Once you have either Q1 or Q2, you can use the same equations used before
to find the other one. Answer of the first one is just Q1+Q2. Answer of the second one is Q1. 

Question 3: Score 1/1


Comment: 

Question 4: Score 1/1


Comment: 
For producers to be tempted to enter
the market, the LAC (same as ATC in this case) must never drop below P.
So, the minimum of LAC must be >=P
Calculate derivative of LAC and equate
it to 0. Plug in the value you found as Q into ATC(Q) to find the price.