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(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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