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PART I (50%). SHORT-ANSWER QUESTIONS.EACH PROBLEM IS WORTH 5%. ANSWER 10 OUT OF 12 QUESTIONSQ1IO studies:-various market structures-°rm±s strategies in di/erent market structures, such as pricing, output, entry-exit,and other more complicated strategies-welfare properties of strategies used by °rmsQ2-product di/erentiation-production e¢ ciency - dominant °rm with competitive fringeQ3-for PC °rms the pro°t-maximizing condition isMR=MC, andMR=p, thereforein equilibriump=MC(q), which gives the relationship between price and supply by a PC°rm-monopolist is not a price taker andMR6=p.In fact,MR(q)> p.Pro°t-maximizing condition isMR(q) =MC(q), which gives the solution for optimalqinde-pendent of price.Q4-outcome of innovation activity is a public good and is thus not provided at thesocially optimum levelQ5-Equilibrium market price will bep=MCsince any other price above marginalcosts will stimulate other °rms to undercut this price and capture the entire market.Q6-price advertisement promotes price competition among producers and reduce °nalgood price-informational advertisement that informs consumers about product quality can solvemarket ine¢ ciency resulting from information incompletenessQ7-the main di/erence is the amount of information about consumers available to°rms. In 1DPD °rms have complete information, in 3DPD they can identify consumer type,in 2DPD they only know there are di/erent consumer types but can±t identify characteristicsof any particular consumer.