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ECS4862 Assignment 2 2024 - DUE 21 June 2024

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  • Course
  • Advanced Microeconomics - ECS4862 (ECS4862)
  • Institution
  • University Of South Africa
  • Book
  • Advanced Macroeconomics

ECS4862 Assignment 2 2024 - DUE 21 June 2024 ;100 % TRUSTED workings, explanations and solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)........... ASSIGNMENT 02 DUE DATE: 21 June 2024 QUANTITATIVE QUESTIONS As in the prescribed book, we use the comma ...

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ECS4862
ASSIGNMENT 2 2024
UNIQUE NO.
DUE DATE: 21 JUNE 2024

, ASSIGNMENT 02
DUE DATE: 21 June 2024



QUANTITATIVE QUESTIONS

As in the prescribed book, we use the comma (,) to separate thousands, and the full
stop (.) as a decimal point.

ANSWER THE QUESTIONS AS DIRECTLY AS POSSIBLE AND EXPLAIN YOUR
ANSWERS. ALL WORKINGS MUST BE SHOWN OTHERWISE, FULL MARKS WILL
NOT BE AWARDED.

QUESTION 1

Suppose a large steel manufacturing industry consists of D identical firms and the
. Each firm’s total cost is 0.5𝑐𝑐2 + 1.
market demand curve is 𝑃𝑃 = 𝑘𝑘 − 𝑚𝑚𝑚𝑚

(a) Find the Cournot equilibrium quantity per firm. (5 marks)
(b) Find the Cournot equilibrium market quantity and price. (3 marks)
c) Find the Monopoly market quantity, markup, and elasticity of demand. (3 marks)
d) Find the Duopoly market quantity, markup, and elasticity of demand. (3 marks)
e) Find in the perfectly competitive markets, the markup and elasticity of demand.
(3 marks)
f) Assume that D-1 Firms merged into Firm 1, as a leader produces quantity M.
Whereas the unmerged firm becomes Firm 2, a follower producing quantity Z. The
inverse market demand curve is given by 𝑃𝑃 = 280 – 2(M + Z) . Firms 1 and 2 have
marginal costs equal to 40, respectively.
(i) Assuming duopoly, find the reaction function, equilibrium output and price. Plot the
reaction function and show the equilibrium quantities. (7 marks)
(ii) Find the Stackelberg equilibrium quantities and price. (4 marks)
(iii) Using well annotated diagram show the Stackelberg equilibrium in (i). (3 marks)


QUESTION 2

a) In the reward program of leading fast fast-moving consumer goods market there
are only two firms. Firms A and B should decide whether to offer a frequent buyer
program to their customers. The annual profits of Firms A and B associated with
each strategy are summarized in the following table below.

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