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# 3.2 - Problem Set#3.2 Use Figure 1 for questions 1-8 1 A...

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Problem Set #3.2 Use Figure 1 for questions 1-8. 1. A monopolist facing the demand and cost conditions in Figure 1 would choose to operate at point ____ unless her fixed costs were more than ____. a. B, 400 b. C, 1800 c. A, 1200 d. C, 60 e. C, 120 2. Relative to a competitive equilibrium, monopoly equilbrium generates “deadweight loss” equal to: a. 200 b. 400 c. 600 d. 800 e. 900 3. You share the market with another firm. If you know that your rival will produce an output of 20. Your best response is to produce an output of ___. 4. You share the market with another firm and agree to collude. You agree that each of you will produce an output of ____. 5. You share the market with another firm. If you know that your rival will produce an output of 40. Your best response is to produce an output of ___. 6. In a Cournot-Nash equilibrium, each “player” (A) maximizes her own profits, expecting that the other (B) will: a. match A’s output b. not change his (B’s) output c. produce what the market will bear d. produce in a different market e. respond strategically

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3.2 - Problem Set#3.2 Use Figure 1 for questions 1-8 1 A...

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