Martha and Don are competitors in a local market and eac of $10 000. If one adve

Question

Martha and Don are competitors in a local market and eac of $10 000. If one advertises and the other doesn't. then theeither of them advertises, e and the other will carn $7000. What is Martha's dominant strat Who advertises will earn a profit of sis 6 43. ·If ng to decide if it is worthwhile to advertise. each will earn a profit a. She should advertise, and she will earn $5000. strategy? b. She should not advertise, and she will earn $10 000. Martha has no strategy that guarantees her the most money. She should advertise, and she will earn $15 000. c. d. What is one of the a. 44. The average-fixed-cost curve must eventually rise b. The marginal-cost curve eventually rises as output rises. ost curve intersects the marginal cost curve when marginal cost is at its minimum. The average-total-cost curve is high when a small amount of output is produced becau average-variable-costs are high. d. se 45. Which of the following best resembles a perfectly competitive market? a. the smart phone market b. the banana market c. the soft drink market the tap water market d. Market demand is given as QD-220-4P, Market supply is given as Qs = 2P + 40. What is the point elasticity of demand if the price is $42? a. 1.20 b. 0.68 46. c. 4.95 d. 3.23

Explanation / Answer

44. Marginal cost curve first decreases with increase in output but then starts increasing with increase in output.

It eventually rises as output rises.

OPTION B

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