question
Assume that a profit maximizing monopolist is producing a quantity such that marginal cost exceeds marginal revenue. We can conclude that the
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firm's output is larger than the profit maximizing quantity
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Suppose that a firm can produce its output at either of two plants. If profits are maximized, which of the following statements is true
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all of the above
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The monopolist has no supply curve because
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the quantity supplied at any particular price depends on the monopolist's demand curve
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The more elastic the demand facing a firm,
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the lower the value of the Lerner index
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The monopolist that maximizes profit
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imposes a cost on society because the selling price is above marginal cost
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The market structure in which strategic considerations are most important is
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oligopoly
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A monopolist has set her level of output to maximize profit. The firm's marginal revenue is $42 and the price elasticity of demand is Nd= 1.75. The firm's profit maximizing price is approximately
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$98
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You produce stereo components for sale within two markets, foreign and domestic, and the two groups of consumers cannot trade with another. If your firm practices third-degree price discrimination to maximize profits, the marginal revenue
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all of the above
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A price-discriminating monopolist is observed charging, Pa=$12 and Pb=$10 in two distinct markets wherein price elasticities are given by Na=2 and Nb=4
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To maximize profit sales should be increased in market B and decreased in market A
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The authors cited statistical evidence that the price elasticity of demand for Royal Crown cola is Nd=2.4 and the price elasticity of demand for Coke is roughly Nd=5.5. Which firm likely has stronger brand loyalty among customers that provides greater potential for monopoly power in the cola market?
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Royal Crown
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A dominant strategy can best be described as
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A strategy that is optimal for a player no matter what an opponent does
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A Nash equilibrium occurs when
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each firm is doing the best it can given its opponents' actions
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Two firms sell 100% orange juice in 10 oz bottles. The juice is only good for one week. The two firms have contracts for all the oranges produced in a large geographic area. Each firm decides how many bottles of juice to produce at the same time. This market is best described with a
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Cournot model
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Markets can fail to achieve efficiency when
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there are markets with imperfect competition
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McDonald's restaurant located near the high school offered a Tuesday special for high school students. If high school students showed their student ID cards, they would be given 50 cents off any medium combination meal. This practice is an example of:
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price discrimination
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As the manager of a firm you calculate the marginal revenue is $175 and marginal cost is $165. You should
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expand output
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The firms in a market have decided not to compete with one another and have agreed to limit output and raise price.
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This practice is known as collusion and is illegal in the United States
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Suppose two Cournot duopolist firms operate at constant average cost,c. The market demand is p=a-bQ. Each firm will produce
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a-c/3b
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For a market with a linear demand curve and constant marginal cost of production, why are the reaction functions for the Cournot duopoly sellers also straight lines?
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We know that the marginal revenue curves for linear demand curves are also straight lines.
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If the inverse demand curve a monopoly faces is p=120-2q, and MC is constant at 24, then profit maximization
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is achieved when 24 units are produced
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Which of the following requirements is necessary to practice price discrimination?
I. The firm must have market power
II. The firm can prevent arbitrage of its product
III. The firm faces a perfectly elastic demand curve
IV. The firm operates in a perfectly competitive industry
I. The firm must have market power
II. The firm can prevent arbitrage of its product
III. The firm faces a perfectly elastic demand curve
IV. The firm operates in a perfectly competitive industry
answer
I and II
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