6. A firm divides its market into two submarkets to practice price discriminatio

Question

6. A firm divides its market into two submarkets to practice price discrimination. The elasticity of demand (measured in absolute value) in market A is smaller than the elasticity of demand in market B.

a. Submarket A will have a lower price than market B

b. Submarket B will have a lower price than submarket A

c. Each submarket will have the same price

d. Submarket A will have a higher MR than Submarket B

7. If a Prisoners’ Dilemma game is played repeatedly as in the Beauregard case (or Tit for Tat in the text),

a. Each player can punish the other player in subsequent plays of the game for not choosing the collectively best strategy of the game

b. Each player will still choose their dominant strategy on each play of the game

c. Neither a. or b. are correct

8. Each point on an expansion path:

a. has a different input price ratio.

b. has a different marginal rate of technical substitution [MRTS].

c. has the same total cost.

d. is cost-minimizing.

9.If quantity demanded increases while total revenue falls, then

a. The percentage change in price must be less than the percentage change in quantity

b. The percentage change in price must be greater than the percentage change in quantity

c. The percentage change in price must be the same as the percentage change in quantity

d. Demand must be elastic

10. In the short-run, if the price falls, the competitive firm will respond by:

a. reducing output along its marginal cost curve as long as price exceeds average variable cost.

b. increasing its output in order to sell higher quantities.

c. liquidating its assets and shutting down.

d. producing at the output level where average variable cost is equal to marginal revenue.

Explanation / Answer

Question number 6. Profit maximizing quantity in a price discriminating monopoly indicates that the price in the market with inelastic demand should be higher than the price in the market with elastic demand. Given that the market demand that belongs to A is less elastic or inelastic, its price should be more.option B is correct.

Question number 7 correct option is a this is because in repeated gave the behaviour is analysed and the responses are recorded. In this way an appropriate strategy for the players to discourage deviation is to punish the rival

Answer to question number 8 is option B. Expansion path in a production function is drawn for different output or Indifference curves this is different from each other in terms of mrts.

Question number 9. Given that quantity demanded increases and total revenue Falls. This can happen only when price is falling and so when price Falls and total revenue also Falls there is a elastic demand. This implies that option B option and D correct

Question number 10 the correct choice is option A. When the market price Falls there is no way to influence the market price by any single firm. It takes the price is given and so now reduced the output along its marginal cost curve till the point where AVC is reached its minimum.

Related Questions

Navigate

• Browse (All)
• Browse 6
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.