## (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.

More information is

required to answer the

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.

More information is required to

answer this question.

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.

More information is required to answer this question.

1 points Click Save and Submit to save and submit. Click Save All Answers to save all

answers.

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