(30 Points) Suppose the demand function faced by an oligopolist is Q = 100 – 10P or P = 10 – 0.1Q

10.1. 1. Derive the Total Revenue (TR) Function.

10.2. If the Cost function is TC = 70 + 2Q, derive the price and quantity which maximizes profits.

10.3. Derive the Price and quantity which maximizes TR or Sales.

11. (10 Points) Under what circumstances is the Justice Department likely to challenge a merger using the HHI?

Quantitative (40 Points)

12. Given the following three factor production function:, where Q is output, K, capital, L, labour, and M, materials. Find the following, use the product rule for differentiation

12.1. aQ/aK

12.2. aQ/aM

12.3. Discuss the elasticity of each factor input.

12.4. Discuss the returns to scale.

Price: $30