Reference no: EM13151067
1. A competitive industry currently consists of N= 10 identical firms. An individual firm's total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 3000-5P. In the short run, how much will each firm produce in the equilibrium?
a . q = 0
b. q =20
*c. q = 200
d. q = 2000
2. A competitive industry currently consists of N= 10 identical firms. An individual firm's total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 3000-5P. In the long run, how much will each firm produce in equilibrium?
a . q = 0
*b. q =20
c. q = 200
d. q = 2000
3. Consider a competitive where each firm's total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 3000-5P. In the long run, consumer surplus will be equal to:
a . 0
b. 2,900
c. 240,000
*d. 841,000
4. A monopolist faces a demand curve given by Q=50-(p/2) and has constant marginal (and average cost) of 16. The monopolist maximises profit by setting price equal to:
a. 16
b. 21
c. 25
*d. 58
5. Assume that individuals are homogeneous and that each has a demand curve of the following form for internet service: p=10-0.5q where p is the price per hour and q is hours per month. Assume the firm has a constant marginal cost of $1. The profit maximising two-part tariff results in the firm selling ______ hours and receiving total revenue of ________ from each consumer:
a. 9: 18.
b. 10: 18:
*c. 18: 99.
d. 10: 99.
6. Consider the market for movies in which there are two types of consumers (students and non-students) with demand curves given by the following:
Student: q=30-2p
Non students: q=30-p
If the marginal cost (and average cost) of movies is constant and equal to 8, then third degree price discriminating monopolist would sell movies to students at a price of _____ and non-students at a price of _____.
a. $7.00; $11.00
b. $11.00; $5.50
*c. $11.50; $19
d. $19; $11.50
7. A firm that produces houses has a total costs function given by the following: TC
= 144 + 4Q2. If the industry in which this firm operates is perfectly competitive, in the long run competitive equilibrium the number of houses the firm will produce is equal to:
a. 2
b. 6*
c. 16
d. 18
8. Adam, Joe and Estelle constitute the entire market for chicken. Adam's demand curve is given by
QA = 100 - 2P
Joe's demand curve is given by
QJ = 160 - 4P
Estelle's demand curve is given by
QE = 150 - 5P
Using this information, when P = 35 Adam's, Joe's, Estelle's and market demand for chicken are:
a. 30, 20, 5, 55
b. 50, 60, 25, 135
c. 30, 20, 0, 50*
d. 0, 20, 0, 20
9. Suppose a (third degree) price discriminating monopolist wishes to sell a good to two markets A and B. In market A the demand curve is PA = 20 - QA and in market B the demand curve is PB = 16 - QB . If the monopolist's marginal cost is MC = Q, then what is the profit maximizing price for each market?
a. PA = 13.33, PB = 10.67
b. PA = 10.67, PB = 13.33
c. PA = 14.5, PB = 12.5*
d. PA = 12.5, PB = 14.5
10. Consider the following information about Adam and Betty who wish to purchase season tickets for football and cricket at the Sydney Cricket Ground:
Season ticket for cricket
Adam's willingness to pay $100
Betty's willingness to pay $600
Season ticket for football
Adam's willingness to pay $700
Betty's willingness to pay $500
If bundling is permitted, the most revenue a monopolist can make from selling cricket and football season tickets is?