gg

Suppose that there are three states of the world, a, b, and c. The probabilities of the three states are 1 = 0.25, 2 = 0.5, and 3 = 0.25. Let A, B, and C denote the Arrow-Debreu securities that pay $1 in states a, b, and c, respectively. That is, A = (1,0,0), B = (0,1,0) and C = (0,0,1). Let pA = 0.4, pB = 0.5 and pC = 0.2 denote the prices of A, B, and C.

Consider a security X which is worth $2 in state a, $3 in state b, and $1 in state c. If there are liquid markets for A, B, C and X, what is the price of X?

1. A firm has Q* units of production capacity and its marginal cost is given by MC = 20 for Q

2. Two firms, Alpha Mowers and Beta Mowers, sell qA and qB identical lawnmowers (respectively). Market (inverse) demand is p = 150 - Q where Q = qA + qB . Both firms have a constant marginal cost of $30. The equilibrium quantity for each firm is ___ .

3. Firms A and B both produce an identical product, steel. The marginal cost of producing steel is $501/tonne for A and $490/tonne for B. The fixed production costs are zero for both firms. Industry demand is given by Q = 400 - 0.2P. Assume that price must be an integer (e.g., 405, 406, etc). In the Nash-Bertrand equilibrium, profits earned by Firm B is equal to ___. (do not enter a dollar sign or comma in the value you enter).

Assume that the manufacturing of cellular phones is a perfectly competitive industry. The market for cellular phones is described by the following demand function Qd = -25/12p + 9851/12

In addition, this industry consists of 63 identical manufacturers with the following variable cost function VC(q) = 1q^2 + 9q

The industry supply function is of the form Qs = a x P + b

What is "a"?

What is "b"? What is the aggregate equilibrium quantity?

What is the equilibrium price?

What is the production level of each firm in the market?

What are the variable profits of each firm?

In order for this industry to have zero entry in the long run what must the fixed costs be ____

Assume that the manufacturing of cellular phones is a perfectly competitive industry. The market for cellular phones is described by the following demand function Qd = -25/12p + 9851/12

In addition, this industry consists of 63 identical manufacturers with the following variable cost function VC(q) = 1q^2 + 9q

The industry supply function is of the form Qs = a x P + b

What is "a"?

What is "b"? What is the aggregate equilibrium quantity?

What is the equilibrium price?

What is the production level of each firm in the market?

What are the variable profits of each firm?

In order for this industry to have zero entry in the long run what must the fixed costs be ____