1. 10 consumers, ranked by their value for a network product v = 1...10, are deciding whether to connect to the network. If there are n people on the network, including oneself, then a consumer's willingness to pay equals n x v.

a. What is the highest price at which 4 people connect to the network? (Hint: the person with v = 9 joins if the price is no higher than 18, since that would mean 2 people in the network: v=9 & v=10.)

b. What is the highest price at which 9 people connect to the network?

2. The demand function for the Msgr social network is related to perceived market share s and actual market share n by the equation: p = 512s(1-n).

Calculate the highest equilibrium price at which Msgr could sustain a market share of 75%. (2 points) (Hint: in equilibrium, perceived & actual market share will be the same.)

3. A firm in a perfectly competitive market has the following cost function: c(y) = 4y2 + 450.

a. If the market price of their product is $200, how many units should they produce, and what will their profits be? Should they shut down or exit the market?

b. If the market price falls to $50, how many units should they produce, and what will their profits be? Should they shut down or exit the market?

That is all informations I have. It comes stright out from tescher's questions.