Q1. Suppose there are ten firms in the wiffleball market, in which the market demand elasticity is -1.1. The elasticity of supply is .9. A single firm in this industry decides that, because there are only 9 competitors, it might be a good idea to increase prices by 1%. Calculate the residual demand elasticity facing a single firm.
Q2. The price elasticity of demand for umbrella in Drytown is -3, and in Wettown the elasticity is 1.5. A single firm supplies the umbrellas in both towns. If the marginal cost per umbrella is $2.00, how much should the firm charge for umbrellas in Drytown and in Wettown?
Q3. A monopolist faces two separate demand curves: P1 = 150 - 5Ql, and P2 = 90 - 2Q2. The firm's marginal cost is constant at 50. Find Q1, Q2, P1, P2.