Question 2018

ty
2 a) Revenue 0 (a a)
=
-

Cust =
PEQ
MR
=
a -
2Q MC =

PE

PE
=>
= a -
2Q

2a a = -

PE
&= a-PE

Pa -

ta + tPE
=
a + EPF t(a =
+
PE)

2b) Revenue =

PE9 Cost =

cq zMC
=
c

=
Ca 2x3q
-

MR= a
-

20
MR = MC

2x c
=

a
=
-

2a a =
-
2

C
a
-

Q =

E.

(a
* -

ay PE =

=PE*11
2(i) Profit =[E(a PECT[(**) PECPE)
+ -

-
(a PE) (a PE) PECE)
-
+ -

(aE)(OPE-PE
E)
-(E)
subPE =
-

E(a
-
-
PE) a

:.E(a (EP) -

Eacy
6(a c)2
-

-
2(ii) profit of engine
:

(a(19-29. Because 9 Q,
=

-
((c))a
-
(EY(t(a 2 -

-
(EY)(E(*)
x-
=

j(a -

c)" c)-
#profit to(a (c
+
-
-

(a c-
-

2(ii)P (a
= +
PE)
=
(a + 2
=

(3))

3
=

2d) Merger
profit- cq

q(a x c)
-
-
-

=
a9
-

9"-cq

profit maximising
=

q
dTT
-a -

2q-c =
0 -
Again because q =
0,
q
a -

c =
2q
c
a -

q
= -

(c -

zY(z -
cE)

(EY( c +(a qz
-

= - =

t(a c)") i(a c.

-
-
... profits increased.
of
(ans =

Pa
=
-

=ac
2c + 22
-
+

catSECCqVenthata
welfare
cor
=

new
quantity: a
old a +PE
ta (t)
= - =

tc Ga -tC
=
-

a -

kc =
c
a
in
quantity transacted increased

- as pricet and
qty , consumer welfareincreased.