# (solution) 1. QUESTION 1 Consider a single price monopolist that faces the

Question is in the file attached.   All of them are multiple choice questions.

1. QUESTION 1 Consider a single price monopolist that faces the following
demand curve: p=150-Q. The total cost curve for this monopolist is
given by the following: TC=100+10Q+Q2. Which of the following is
true?
2. The monopolist will earn profit of -450 and
leave the industry in the long run.
The monopolist will earn zero profit and
leave the industry in the long run.
The monopolist will earn zero profit but
remain in the industry in the long run.
The monopolist will earn profit of 2350 and
remain in the industry in the long run.
The monopolist will earn profit of 4025 and
remain in the industry in the long run.
1 points QUESTION 2 1. A single price monopolist faces a demand curve given by
Q=200-2p and has constant marginal (and average total cost) of 20.
What is the value of the deadweight loss generated by this
monopolist? 2. 0
800
3200
6400
None of
the
above
1 points 1. QUESTION 3 A single price monopolist faces a demand curve given by
Q=200-2p and has constant marginal (and average total cost) of 20.
What is the economic profit made by this profit-maximising
monopolist? 2. 0
800
3200
6400
None of
the
above
1 points QUESTION 4 1. Consider a single price monopolist that has standard U-shaped
cost curves. If the monopolist earns positive economic profit, which
of the following statements is true? 2. The monopolist sets a price greater than
marginal cost.
The monopolist sets a price greater than
average total cost.
The monopolist chooses level of output where
marginal revenue is equal to marginal cost.
a, b and c are correct.
none of the above.
1 points 1. QUESTION 5 Consider the following game. Terry and Kerry are roommates
who must make decisions about cleaning simultaneously. Terry?s
payoff is the first number in each cell and a higher number is a
better outcome: 2. Kerry Terry 3. Clean
Don?t clean Clean
( 8, 2 )
( 10, 3
) Don?t clean
( 3, 5 )
( 4, 1 ) This game has no Nash equilibrium.
This game has a single Nash equilibrium.
This game has more than one Nash equilibrium.
Both Jerry and Kerry have a strictly dominant strategy.
both b and d are correct.
1 points QUESTION 6 1. Consider a monopolist that has two types of consumers. The
first, students have a demand curve given by the following:
QA=120-2p. The second type of consumer are non-students who
have the following demand curve: QB=200-4p. If the monopolist has
constant marginal and average total cost equal to 20, which of the
following is true if the monopolist practices third degree price
discrimination?
2. The quantity sold to students
equals 35 and non-students equals
60.
The quantity sold to students
equals 40 and non-students equals
35.
The quantity sold to students
equals 35 and non-students equals
40. The quantity sold to students
equals 40 and non-students equals
60.
None of the above
1 points 1. QUESTION 7 Colm and Zoe are considering buying a car. The retailer offers
two types of cars ? the gold and the silver ?badged? version.
Valuations for Colm and Zoe for each car are in the table below: Silver
Gold Colm
25000
55000 Zoe
21000
34000 2.
Assume that each consumer buys one plan and chooses the car
which maximises their consumer surplus. A car will be purchased as
long as consumer surplus is non-negative. If the marginal cost of
each car is zero, which set of prices for the silver (pS) and gold
badged (pG ) cars will maximise profits if the retailer must engage in
menu pricing or second degree price discrimination?
3. pS=20999
and
pG=54999.
pS=20999
and
pG=49999.
pS=20999
and
pG=47999.
pS=24999
and
pG=43999.
pS=33999
and
pG=33999.
1 points 1. QUESTION 8 Two shops in Newtown, ?Malcolms Meatballs? and ?Bill?s
Burgers?, are deciding whether to hire a security guard. The security
guard will provide deterrence to both stores. Each store will benefit
from the presence of a security guard by reducing theft. The payoff
matrix is given by and assume that Bill and Malcolm make their
decision simultaneously and that a higher number represents a
better outcome:
Bill?s Burgers Malc
olm?s
Meat
balls Hire Do not hire Hire 6, 4 -2, 12 Do not
hire 12, -6 -3, -3 2.
In the Nash equilibrium:
3. Bill hires a guard but
Malcolm doesn?t.
Bill doesn?t hire a guard but
Malcolm does.
Neither Bill nor Malcolm
hire a guard.
Both Bill and Malcolm hire a
guard.
question.
1 points 1. QUESTION 9 Consider a monopolist that has two types of consumers. The
first, students have a demand curve given by the following:
QA=120-2p. The second type of consumer are non-students who
have the following demand curve: QB=200-4p. If the monopolist has
constant marginal and average total cost equal to 20, which of the
following is true if the monopolist practices third degree price
discrimination?
2. Total profit
earned equals
700.
Total profit
earned equals
800.
Total profit
earned equals
1550.
Total profit
earned equals
1700.
None of the
above
1 points QUESTION 10 1. Bill and Jane are considering buying a mobile phone plan. The
retailer offers two types of plans ? the standard and the deluxe. Valuations for Bill and Jane for each plan are in the table below: Standard
Deluxe Bill
15
30 Jane
25
55 2.
Assume that each consumer buys one plan and chooses the plan
which maximises their consumer surplus. A plan will be purchased
as long as consumer surplus is non-negative. If the marginal cost of
each plan is zero, which set of prices for the standard (pS) and
deluxe plans (pD ) will maximise profits if the retailer must engage in
menu pricing or second degree price discrimination?
3. pS=25
and
pD=25.
pS=15
and
pD=55.
pS=55
and
pD=55.
pS=15
and
pD=44.
pS=14
and
pD=46.
1 points QUESTION 11 1. Consider a single price monopolist that faces the following
demand curve: p=150-Q. The total cost curve for this monopolist is
given by the following: TC=100+10Q+Q2. Which of the following is
true?
2. The monopolist will set price
equal to 115 and sell 35 units.
The monopolist will set price
equal to 35 and sell 115 units.
The monopolist will set price
equal to 30 and sell 120 units.
The monopolist will set price
equal to 60 and sell 90 units.
1 points QUESTION 12 1. Assume that a single price monopolist has a marginal cost
curve given by MC=10+2Q. Further the demand curve that it faces
is given by p=250-Q. Compared to a perfectly industry, the
deadweight loss generated by this monopolist equals: 2. 0.
600:
1800.
3600.
None of
the
above.
1 points 1. QUESTION 13 Consider a monopolist that has two types of consumers. The
first, students have a demand curve given by the following:
QA=120-2p. The second type of consumer are non-students who
have the following demand curve: QB=200-4p. If the monopolist has
constant marginal and average total cost equal to 20, which of the
following is true if the monopolist practices third degree price
discrimination?
2. The price charged to students
equals 35 and non-students equals
60.
The price charged to students
equals 40 and non-students equals
35.
The price charged to students
equals 35 and non-students equals
40.
The price charged to students
equals 40 and non-students equals
60.
None of the above
1 points QUESTION 14 1. Consider the model of monopolistic competition discussed in
lectures. If the firm has standard U-shaped cost curves and earns
positive economic profit in the short-run which of the following is
true in the short run? 2. Price is greater than
average total cost.
Price is greater than
marginal revenue.
Price is greater than
marginal cost.
b and c are correct. a, b and c are all
correct.
1 points 1. QUESTION 15 A monopolist faces a demand curve given by Q=200-2p and
has constant marginal (and average total cost) of 20. What is the
economic profit made by this profit-maximising monopolist if they
engage in perfect price discrimination? 2. 0
800
3200
6400
None of
the
above
1 points QUESTION 16 1. Consider the model of monopolistic competition discussed in
lectures. If the firm has standard U-shaped cost curves and earns
zero economic profit in the long-run which of the following is true in
the long run? 2. Price is greater than
average total cost.
Price is greater than
marginal revenue.
Price is greater than
marginal cost.
b and c are correct.
a, b and c are all
correct.
1 points 1. QUESTION 17 Assume that individuals are homogeneous and that each has
a demand curve of the following form for internet service: p=50-2q
where p is the price per hour and q is hours per month. Assume the
firm has a constant marginal cost of \$12. The profit maximising twopart tariff results in the firm setting a per unit price equal to ______
and earning ________ profit from each consumer: 2. 12: 361.
12: 589:
31: 361.
31: 589.
None of
the
above. 1 points QUESTION 18 1. Consider the following game. Terry and Kerry are roommates
who must make decisions about cleaning simultaneously. Terry?s
payoff is the first number in each cell and a higher number is a
better outcome: 2. Kerry
Clean
Terry 3. Don?t clean Clean
( 8,
2)
( 10,
3) Don?t clean
( 3, 5 )
( 4, 1 ) Only Terry has a strictly dominant strategy.
Only Kerry has a strictly dominant strategy.
Both Terry and Kerry have a strictly dominant strategy.
Neither Jerry and Kerry have a strictly dominant strategy.
None of the above.
1 points 1. QUESTION 19 Assume that individuals are homogeneous and that each has
a demand curve of the following form for internet service: p=50-2q
where p is the price per hour and q is hours per month. Assume the
firm has a constant marginal cost of \$12. The profit maximising twopart tariff results in the firm selling ______ hours and receiving total
revenue of ________ from each consumer: 2. 9.5: 361.
9.5: 589:
19: 361.
19: 589.
None of
the
above.
1 points QUESTION 20 1. Consider the following game represented in normal form. Terry
and Kerry are roommates who must make decisions about cleaning.
Terry?s payoff is the first number in each cell and a higher number is
a better outcome. Assume that Terry makes his decision first, if so
what is the Nash Equilibrium of this game: 2. Kerry Terry Clean
Don?t clean Clean
( 8, 2 )
( 10,
3) Don?t clean
( 3, 5 )
( 4, 1 ) 3. Terry will clean and Kerry will not clean.
Terry will not clean and Kerry will not clean.
Terry will not clean and Kerry will clean.
Terry will clean and Kerry will clean. 