Just ignore all the figure questions. Question #1: Monopolists A) face downward

Question

Just ignore all the figure questions.

Question #1: Monopolists

A) face downward sloping demand curves.

B) are price takers.

C) have no fixed costs.

D) maximize revenue, not profits.

Question #2: In the Stackelberg model:

A) each firm takes the prices charged by its competitors as given.

B) prices are higher and quantities are slightly less than we would see if the firms colluded to achieve the monopoly outcome.

C) each firm takes the quantities produced by its competitors as given.

D) one firm plays a leadership role and its competitor's simply react to the leader's quantity.

Question #3: Consider figure 5 that depicts a duopoly selling products differentiated in quality.

A) The change from H to H’ leads to:

B) An increase in the demand for the high quality product

C) A decrease in the demand for the high quality product

D) An increase in the location of the indifferent consumer (V)

E) An increase in the demand of both products

Question #4: Which of the following must exist so that the firm can practice personalised pricing?

A) The firm must be perfectly informed about each consumers’ willingness to pay.

B) There must be groups within the consumers, clearly identified.

C) The prices must satisfy incentive compatibility.

D) All the answers are true.

Question #5: In an horizontally differentiated market, two firms are located respectively in 0 and 1 (the two extremes of the Hotelling line). The consumers valuation for the product is V=100 and the transportation cost is equal to 5. Which of the following is true?

A) The indifferent consumer is located at 1/2.

B) The indifferent consumer is given by (p2-p1)/10+1/2

C) The indifferent consumer is given by (p2-p1)/10+1/2

D) D The indifferent consumer is located at 0.

Question #6: If a firm is a market covering monopoly in a linear city and the transportation cost increases:

A) Then, everything else equal, the market will not be covered

B) Then the firm should decrease the price,

C) Then the firm should increase the number of varieties

D) All the answers are true.

Question #7: In a Cournot duopoly we have that:

A) If the cost of one firm increases, her price increases and the price of the rival decreases.

B) If the cost of one firm increases, her quantity increases and the quantity of the rival decreases.

C) If the cost of one firm increases, her quantity decreases and the quantity of the rival increases.

D) If the cost of one firm increases, the price decreases.

Question #8: Suppose that a firm knows that she faces two types of consumers: H and L. The demand of H is pH=100-2QH and the demand of L is pL=50-4QL. Suppose that the marginal cost is MC=5. The firm is willing to use two-part tariffs to price discriminate. Figure 7 represents the pricing plans of the firm. Which of the following is the optimal menu pricing scheme?

A) X=10, Y=2025, Z=200

B) X=5,Y=9025/4, Z=200

C) X=5,Y=1725/4, Z=200

D) X=5,Y=1825, Z=200

Question #9: Consider figure 5 that depicts a duopoly selling products differentiated in quality.

A) The change from H to H’ reflects:

B) In increase in quality of the high quality product

C) A decrease in quality of the high quality product

D) A decrease in the willingness to pay for both products (V)

E) An increase in the willingness to pay for both products (V)

Question #10: Given that two firms sell differentiated product in quality,

A) The low quality firm can increase the profit by leap-frogging over the quality of the high quality firm

B) The low quality firm can never increase her profit by improving quality.

C) The high quality firm has no incentive to increase quality

D) The firms’ profit does not change with changes in the quality of the products.

Question #11: Two firms, 1 and 2, compete in Cournot. The demand is P=300-10Q and the marginal cost of both firms is MC=50. Which of the following is true?

A) The best reply of firm 1 is p1=125-5p2.

B) The best reply of firm 1 is q1=125+5q2.

C) The best reply of firm 1 is p1=125+5p2.

D) The best reply of firm 1 is q1=125-5q2.

Question #12: In the case of a personalized price-discriminating monopoly, there is no

A) transfer of consumer surplus to the producer.

B) deadweight loss.

C) economic profit.

D) All answers are true.

Question #13: A firm selling in two markets is practicing price discrimination:

A) any time it charges different consumers different prices.

B) when it refuses to sell the good to some group of consumers.

C) when it is charging different consumers different prices and the price difference is not based upon cost differences.

D) all answers are true.

Question #14: In perfect competition,

A) there are significant restrictions on entry.

B) each firm can influence the price of the good.

C) there are few buyers.

D) all firms in the market sell their product at the same price.

Question #15: Consider figure 4a that depicts the reactions of two price competing firms that sell differentiated product in a Hotelling line. The arrows indicate:

A) An increase in the valuation for the product (V)

B) A decrease in the valuation for the product (V)

C) An increase in the transportation cost of the consumers (t)

D) A decrease in the transportation cost of the consumers (t).

Question #16: Consider Figure 1 that depicts the reaction functions of Cournot duopolists. Which of the following is true?

A) A decrease in the cost of firm 1, moves line T outwards

B) An increase in the cost of firm 1, moves line T outwards

C) A decrease in the cost of firm 1, moves line S outwards

D) A increase in the cost of firm 1, moves line S outwards

Question #17: If a merger is to occur when there are 10 firms in the market, then

A) If at least 9 firms merge, the merger is profitable for the insiders

B) If at least 5 firms merge, the merger is profitable for the insiders

C) Only if 9 firms merge, the merger is profitable for the outsiders

D) Only if 9 firms merge, the merger is profitable for the outsiders

Question #18: Quantity-competing firms in an oligopolistic industry

A) Will raise quantity in response to a quantity increase.

B) Will lower quantity in response to a quantity decrease.

C) Will not raise quantity in response to a quantity increase.

D) Will not lower quantity in response to a quantity decrease.

Question #19: According to the Cournot duopoly model, if both firms in the industry face identical demands for their product then:

A) Both firms will end up with an equal share of the market.

B) The firm with lowest cost will have a larger market share.

C) The firm with the highest cost will have the larger market share.

D) None of the answers is true.

Question #20: Consider a monopoly that sells a product for which the consumers have a utility V=200. The monopoly is thinking of introducing two variants of the product in the market and the transportation cost per unit of the consumers is t=40. Which of the following corresponds to the price that covers the market when the variants are located optimally on the product line:

A) The price should be 190

B) The price should be 1/4

C) The price should be 200

D) The price should be 200/4.

Question #21: Consider figure 3 that depicts a monopoly firm offering two variants of the product.In order to cover the market and maximize the profit the firm should:

A) Decrease the price

B) Move the varieties inwards.

C) Move the varieties outwards.

D) Increase the price

Question #22: Which of the following statements is true regarding a monopoly firm that covers the market?

A) The firm should NOT sell to all consumers.

B) The price is independent of the transportation cost.

C) If the transportation cost increases, the firm should decrease the price.

D) If the transportation cost increases, the firm should increase the price.

Question #23: Mergers in a Bertrand industry are

A) Never profitable for the insiders

B) Only profitable if all firms merge

C) Profitable for the outsiders

D) Profitable for the outsiders if there are cost savings.

Question #24: Consider Figure 4b that that depicts the price reaction of firms that supply differentiated product. Which of the following is true?

A) An increase in the quality of the high quality firm leads to an increase in the equilibrium price of the high quality while the equilibrium price of the low quality remains the same.

B) A small increase in the quality of the low quality firm leads to a downward shift of line T.

C) An increase in the quality of the high quality firm leads to a rotation upwards of line S.

D) None of the answers is true.

Question #25: Other things being equal, the Bertrand duopoly model with homogeneous product suggests that profit-maximizing firms in an oligopolistic industry: I. Charge a higher price than monopolies. II. Charge a higher price than perfectly-competitive firms. III. Charge a lower price than monopolies. IV. Charge the same price than perfectly-competitive firms. Which of the following is correct?

A) I only.

B) I and II only.

C) II and III only.

D) III and IV only.

Question #26: Which of the following statements about a monopoly is FALSE?

A) A monopoly is the only supplier of the good.

B) Monopolies have no barriers to entry or exit.

C) The good produced by a monopoly has no close substitutes.

D) Monopoly has no market power.

Question #27: Suppose that the demand for a certain product is P=150-2Q and that the marginal cost is MC=50. Which of the statements is true?

A) If the industry is a monopoly, the deadweight loss is 1250.

B) If the industry is perfectly competitive, the consumer surplus is 1250.

C) If the industry is a monopoly, the consumer surplus is 1250.

D) If the industry is a monopoly, the profit is 1250.

Question #28: Which of the following statements is true?

A) A perfectly competitive industry produces more output and charges the same price as a single-price monopoly.

B) A perfectly competitive industry produces less output but charges a lower price than a single-price monopoly.

C) A perfectly competitive industry produces less output and charges the same price as a single-price monopoly.

D) A perfectly competitive industry produces more output and charges a lower price than a single-price monopoly.

Question #29: Consider a Stackelberg market. Which of the following is true?

A) If the fixed costs of the leader are low, he is more likely to be a predatory leader.

B) If the fixed costs of the follower are high, the leader is more likely to be predatory.

C) The accommodation or predation strategy depends of the fixed costs of the follower.

D) All the answers are true.

Question #30: Consider Figure 6 that depicts the choices of firms (one incumbent and one entrant) in a Stackelberg market. The incumbent can choose to accommodate or fight entry and the follower can choose either to enter or not enter in the market.

A) If K>120, then the incumbent accommodates and the entrant always enters the market.

B) If the incumbent accommodates, the entrant does not enter.

C) The outcome in this industry does not depend on the value of K.

D) All answers are true.

Question #31: The deadweight loss is

A) The difference between the price of the product and the willingness to pay of the consumers.

B) The loss in welfare due to the price being above marginal cost.

C) The variation in price due to the increase in marginal cost.

D) The surplus of the firm.

Question #32: The cost pass-through in monopoly, Cournot duopoly, perfect competition is respectively

A) 1/2, 2/3, 1

B) 1,2/3,1/2

C) 1,1,1

D) 1/2, 1/2, 1/2

Question #33: In order to practice menu pricing a profit maximizing firms must:

A)

Design menus that respect the incentive compatibility constraint.

B) Design menus that respect the participation constraint (or individual rationality).

C) Design menus that maximize profit.

D) All answers are true.

Question #34: Suppose that a monopoly sells to consumers who belong to two different groups. Group 1 has demand equal to Q1=300-P1 and Group 2 has demand Q2=75-1/2P2. The marginal cost is given by c=10. Which of the following is true.

A) The aggregate demand has a kink at p=150.

B) All answers are true.

C) If the monopoly cannot price discriminate, the optimal price in case it sells to all consumers is 130.

D) If the monopoly cannot price discriminate, the optimal price in case it sells to only one group is 155.

Question #35: Consider Figure 2 that depicts the reaction functions of price competition duopolists. The change in line J corresponds to:

A) An increase in the price of firm 1

B) An increase in the cost of firm 1

C) An increase in the price of firm 2

D) An increase in the cost of firm 2

Question #36: Consider Figure 8 that represents a two-part tariff charged by a monopoly. Which of the following is true?

A) The two-part tariff depicted is optimal.

B) In order to increase the profit the firm should charge a higher variable fee

C) In order to increase the profit, the firm should charge a lower variable fee

D) D) In order to increase the profit, the firm should charge a higher fixed fee

Question #37: Figure 9 represents two demand functions by two types of consumers of a software company. The demand for high type is PH=100-2QH and the demand for the low type is PL=75-2QL. The marginal cost is 10. The software company practices menu pricing and offers two plans. In the plan designed for the low type consumers, the variable fee is 15. Which of the following is true?

A) The fixed fee charged in the plan for the high type consumers is given by the area B.

B) The fixed fee charged in the plan for the high type consumers is given by the area C.

C) The consumer surplus of the high type consumers if they buy the plan designed for them is given by the area A.

D) None of the answers is true.

Question #38: Consumer surplus is

A) equal to the price minus the marginal cost.

B) less in the case of a single-price monopoly than in the case of a perfectly competitive industry.

C) zero for a single-price monopolist.

D) positive in the case of a monopolist practicing perfect price discrimination

Question #39: In the case of a perfectly competitive firm, the

A) firm's marginal revenue exceeds the price of the product.

B) change in the firm's total revenue equals the price of the product multiplied by the change in quantity sold.

C) price of the product falls sharply when the quantity the firm sells doubles.

D) firm's marginal revenue is less than average revenue.

Question #40: In a Cournot oligopoly, where firms have the same marginal costs, which of the following is true?

A) If new firms enter the market, the price increases

B) If new firms enter the market, the price decreases

C) If new firms enter the market, the profit increases

D) If new firms enter the market the total quantity decreases

Explanation / Answer

1 faces downward sloping demand curve

2 D

3 fig is missing. Please upload figure

4 The firm must be perfectly informed about each consumers willingness to pay

5 1/2

13 c

Can answer only four questions according to chegg policy. Please send other parts as separate question

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