Midterm_2021_sol.pdf - Midterm Exam 1 ECON 305 Instructor:...

Midterm Exam 1 ECON 305
Instructor: Laura Lasio
November 8, 2021
Instructions
• You have 120 minutes to answer all questions.
• This is a closed-book / closed-notes / closed-slides non-cooperative exam.
• You can use calculators as long as they are NOT programmable.
1. True or False (10 points)
RANDOMIZE 5 QUESTIONS FROM THE FOLLOWING SET
Say if the following claims are true or false. If true, provide a short explanation; if false, explain
why and under which conditions they might be true. Be concise (1-3 sentences per question), refer
to concepts and formulae. Each correct answer gives 2 points .
1. Rate-of-return pricing is the best option to regulate the price of a monopolist.
2. Welfare maximization can only be achieved in perfect competition. 3. A strategy is a player’s best response if it yields the highest payoff regardless of the other
players’ strategy choices.
4. The HHI index is preferred to the C4 because it includes the shares of all firms.