Exercise #2. Suppose a single-product monopoly incurring a marginal cost of production equal to 2. Q11) Determine the profit maximizing price when the elasticity of demand is equal to -2. Exercise #3. Suppose the demand for goods 1 and 2 are respectively 1=12–p1+p2/2 and 2=12–p2+p1/2. No costs are incurred to produce goods 1 and 2.
Q12) Are the products A) Substitutes B) Complements
Q13) Suppose monopoly 1 produces good 1 and monopoly 2 produces good 2. Determine the profit maximizing price set by monopoly 1.
Q14) Suppose a single monopoly produces both goods. Determine the profit maximizing price for good 1.
