Price theory 价格理论 代写

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Price theory 价格理论 代写

P R I C E T H E O R Y

A S S I G N M E N T 2

0

P 1

P 2

BR 1

BR 2

Equilibrium

P

∗

1

P

∗

2

•

I N S T R U C T I O N S & Q U E S T I O N S

Assignment Instructions

Prepare your assignment in accordance with the following instructions:

1. Answer all questions.

2. Show all working.

3. All answers and equations must be typed.

4. All graphs must be computer generated.

5. Your assignment must be your own work.

6. Submit your assignment through Turnitin.

Following the submission of your assignment:

7. Check that you received a Turnitin receipt at your RMIT student email address. If

you have not received a Turnitin receipt then your assignment was NOT successfully

submitted. If you do not successfully submit your assignment, you will receive a

grade of zero.

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file, and that your file appears as you intend.

9. Retain your email receipt as proof of a successful submission.

Failure to follow these instructions will result in the loss of marks.

In accordance with RMIT University policy, late assignments will be penalised 10%

per day, or part thereof. Assignments that are more than ten (10) days late will not

be marked. Note: The timestamp on your assignment will be the time at which you

successfully complete the Turnitin submission process.

There are a total of twenty (20) marks available on this assignment. This assignment

contributes 25% of your final grade.

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Assignment Questions

Two firms, Alpha Vineyard and Beta Winery, produce and sell wine. The demand for

Alpha’s wine is given by the equation,

Q A = 200 − P A + P B .

In this equation, the price of Alpha’s wine is P A per bottle, and the price of Beta’s wine is

P B per bottle. Alpha Vineyard has a marginal cost of MC A = $20 per bottle, and a fixed

cost of FC A = $6000. The demand for Beta’s wine is given by the equation,

Q B = 9000 − 100P B + 40P A .

Beta Winery has a marginal cost of MC B = $10 per bottle, and a fixed cost of FC B =

$10,000. The two firms compete by simultaneously selecting prices.

Question 1: Are the bottles of wine produced by Alpha Vineyard and Beta Winery, homo-

geneous products or heterogeneous products? Your answer must reference the two firms’

demand functions. (3 Marks)

Question 2: Find Alpha Vineyard’s best-response function. (4 Marks)

Question 3: Find Beta Winery’s best-response function. (4 Marks)

Question 4: In equilibrium, what price does each firm charge for a bottle of wine? How

many bottles of wine does each firm sell? What is each firm’s profit? (4 Marks)

Question 5: Which firm has the greater market power? Explain. (3 Marks)

Question 6: How would the equilibrium that you found in question 4 change if Beta Win-

ery’s fixed cost increased to FC B = $100,000? (2 Marks)

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Price theory 价格理论 代写