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JOSÉ RIZAL UNIVERSITY
80 SHOW BOULLEVARD, MANDALUYONG CITY
MANILA, 2010c
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1.c The demand function Px = 20 - èx

The supply function r Sx = 12 + èx
a)c What is the equilibrium Px and èx?
º
b)c If the demand shifted to PX = 30 - èx?

## What would be the new equilibrium Px and èx if the supply function

remains the same?

If the supply function shifted to Sx = 6 + èx, what would be new
equilibrium Px and èx
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2.c The cross price elasticity of product X and Y is Ex1y = -0.38 for Py \$10, the èx =
30 units, if the price of y increase to \$12, what would be new èx?
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3.c Why do you think the U.S. department of Justice blocks mergers which will
make an industry more concentrated?c
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ß.c Explain why automobile manufacture is produce their own engines but purchase
mirrors from independent suppliers?c

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 7 ' c  c 5 c
 c )# 'c &c )#c >8>c )7 c  c %) 'c c c  #c
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Ö.c Levi Straus & co paid \$ß6,Ö32 for a 110 year old pair of Levi͛s jeans, the oldest pair of
jeans by out bidding several other bidders an e bay internet auction, does this
situation best represent producer-producers, consumer-consumer rivalry or
producer-consumer rivalry, explain!c
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6.c What is the amount that you will pay for an asset that would generate an income of
\$1Ö0,000 At the end of each of five years for ten yearsc

\$1Ö0,000
\$1Ö0,000
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7.c An industry consist of three firms with sales of \$200,000, \$Ö00,000 and \$ß00.000, :c
a.c Calculate the Herfindahl-Hirshman index (HHI)
b.c Based on the U.S. department of justice͛s merger guidelines described in the text,
do you think the department of Justice would block a horizontal merger between
two firms with sales of \$200,000 and \$ß00,000? Explain?

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8.c The accompanying graph summarizes the demand and costs for a firm that operates
in a monopolistically competitive market.
a.c What is the firm͛s optimal output?
b.c What is the firm͛s optimal price?
c.c What are the firm͛s maximum profits?
d.c What adjustments should the manager be anticipating?

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: c )% c&c;' 6c: c )% c&c;' ccc
c
)GG6c  'c @c
6c c +>>!c F.&#c  ''c c  c '' c # 'c c
 'Fc c
c 
c c c   0
c c  c 
c   0
 c
+#<( ##c .\$#'5!c + ) #c '' -c .c 0!-c H01O H0c c -c 101 M11c c
)-MME'5M'\$# M11ccc
c
?c%'c;'cc\$ c cJ)#6c # 7 c
'c c' cc=##c&c5 % c
5c+%\$5 6cc 6c>4 !c
c
?'%6c #\$ c c +>8!c F c . *c &c c  /Fc c
c 0
c   0
c 
c
+ % c%c ''!c+H!-c cc)-MME'5M'\$# M44H40ccc
c
J(<6c;c6c;c+> !cF
5 c=%c% cc. 'c5'cc&5c
' 'Fcc  c  0
c c+  c%c ''!cc+!-c4O
4>cc-c101 M1H Hcc)-MME'5M'\$# M1H Hccc
c
 #c '%6c  c ;) ' c %\$# c '*-c  #5*c c 5 % c c
''cc*c+%\$5 6c 6c>4H!c
c
 #c %<6c c %) 7 c  '-c \$5c c  c ;) ' c %7 c '*c
+ (c <6c &%56c >>!c F % c 5 % -c  &%c cc
 7#Pc  c '& c &c ;) ' c 5 % c  #5*c c  c : 6Fc
I<5c .) c c  6c   c c ;) ' c %*c c ' ''6c #%\$c
:7 '*6c7 %\$ c>4>c
c
'c #7 6c )' cc c ) c&c c=%c+%\$5 6cc 6c>48!c
c
#7 cI##%'6c c%c ''c&c)#'%c+ (c<6c>4Hc
#c ' 6c F c  c &c  c =%-c &#  6Fc ;#c &c
(6c %'6c Qc
5G86c+ )5c>44!6c8 c
c
c
'c? #) 6cF%)7 c ))# c #'cc c: cc;) ' c c ' '-c c
/M c ))6cF' ''cc%c?'*6c0c'  '6c>c+>>1!c
c
'c ? #) c 6c F  5*c c  7 '\$#*cc ))# c  #'c  c' c &c  c: c c
'*B6c' ''c?'*c 7 (c+c&%5!c
c
I #6c =  <c c +>>1!c F %)#'c &c : c /)   c (c ?G#c
 5 'c c < 7 'c &c c %) c .#*Fc c c  ('6c c
=<#ccc+ '!c
ccc  0
c c 0

c 
Dccc7 6c-c
 c=' c ' c c144> H04cc7 6c-c=' c
c
c
c
c
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