2. For the second setting, imagine that there is only a single monopolist that sells both types of car. That is, the same firm chooses both Qo and Q1. (a) Write down the monopolist's profits. It should contain separate terms relating to the two types of car. For questions 2-4, leave general terms To and Ti in your expression as in question 1(d), rather than imposing To = 20, T1 = -20 as in questions 1(a)–1(c). (b) Take first-order conditions for the single monopolist. (c) What would the tax rates To, T1 have to be equal to, in order for the equilibrium quantities to be Qo = Q1 = 60 as in question 1(d)? There are two types of car, distinguished by how fuel eficient they are. Type O is the less fuel efficient type, and type 1 is the more fuel efficient. The inverse demand curves for the two types of car are: Po = 250 – Qo – Qı/2, P = 120 – Q1 – Qo/2. (1) Cost functions are Co(Qo) = 50Q0, C:(Q1) = 20Q1 (2)

2. For the second setting, imagine that there is only a single monopolist that sells both types of car. That is, the same firm chooses both Qo and Q1. (a) Write down the monopolist's profits. It should contain separate terms relating to the two types of car. For questions 2-4, leave general terms To and Ti in your expression as in question 1(d), rather than imposing To = 20, T1 = -20 as in questions 1(a)–1(c). (b) Take first-order conditions for the single monopolist. (c) What would the tax rates To, T1 have to be equal to, in order for the equilibrium quantities to be Qo = Q1 = 60 as in question 1(d)? There are two types of car, distinguished by how fuel eficient they are. Type O is the less fuel efficient type, and type 1 is the more fuel efficient. The inverse demand curves for the two types of car are: Po = 250 – Qo – Qı/2, P = 120 – Q1 – Qo/2. (1) Cost functions are Co(Qo) = 50Q0, C:(Q1) = 20Q1 (2)

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter4: Economic Evaluation In Health Care

Section: Chapter Questions

Problem 7QAP

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