90L768Q Electricity Markets and Pricing Theory Homework #2 Due 6/8/2021 1. Suppose a market for a commodity with the following two types of customers. Assume the number of customers in each type is 1,000 in this market. Type A's inverse demand curve: P=10-0 Type B's inverse demand curve: P = 30-20 a. Find and plot the market demand for this commodity in the given market. b. In case the supply curve is given as follows, find the equilibrium price and quantity. How much the total sales would be? Q=7+P 2. Mary's demand curve for food is Q = 12-4P. Her price elasticity of demand for food at price P* equals 0.6. How much is pe? Plot the demand curve and mark P 3. Suppose a perfectly competitive market of a commodity. The number of firms in the market is 5 and assume that there is no more entry into the market. The cost function of each company are given as follows. C(q) = 50g +34 +10 Given the demand curve is D(q) = 3000-60q, find the short-run market equilibrium price and quantity. Show where (i.e., quantity) the profit of each firm is maximized. Use a computer program (e.g., Excel, Matlab, Mathead). 4. Suppose the market of problem 3 became a monopolistic market. There is only one firm supplying the commodity and assume that new entry is impossible. The monopolistic firm's cost function is Cla)=60g +59+15 Assuming the demand curve is same, find the short-run equilibrium price and quantity of this market. Use a computer program (e.g., Excel, Matlab, Mathcad). Compare with the result of problem 3. 90L768Q Electricity Markets and Pricing Theory Homework #2 Due 6/8/2021 1. Suppose a market for a commodity with the following two types of customers. Assume the number of customers in each type is 1,000 in this market. Type A's inverse demand curve: P=10-0 Type B's inverse demand curve: P = 30-20 a. Find and plot the market demand for this commodity in the given market. b. In case the supply curve is given as follows, find the equilibrium price and quantity. How much the total sales would be? Q=7+P 2. Mary's demand curve for food is Q = 12-4P. Her price elasticity of demand for food at price P* equals 0.6. How much is pe? Plot the demand curve and mark P 3. Suppose a perfectly competitive market of a commodity. The number of firms in the market is 5 and assume that there is no more entry into the market. The cost function of each company are given as follows. C(q) = 50g +34 +10 Given the demand curve is D(q) = 3000-60q, find the short-run market equilibrium price and quantity. Show where (i.e., quantity) the profit of each firm is maximized. Use a computer program (e.g., Excel, Matlab, Mathead). 4. Suppose the market of problem 3 became a monopolistic market. There is only one firm supplying the commodity and assume that new entry is impossible. The monopolistic firm's cost function is Cla)=60g +59+15 Assuming the demand curve is same, find the short-run equilibrium price and quantity of this market. Use a computer program (e.g., Excel, Matlab, Mathcad). Compare with the result of problem 3
