ARE 100B - Midterm 1 Key, version B (buff)

# ARE 100B - Midterm 1 Key, version B (buff) - ARE 100B M...

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ARE 100B M. Whitney YOUR NAME: ____________________________________ __ l~ FIRST MIDTERM This exam has two sections. Section A consists of 10 multiple-choice questions, each worth 10 points. Total possible points in Section A = 100. SPRING 2009 Section B consists of 5 problems each worth 30 points. Partial credit is given for correct approach even if final answer is incorrect, so show your work! Total possible points in Section B = 150. Total points in this exam: 250

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SECTION A 1. A monopolist owns two plants with the following cost functions: TCa = 1000 + 300 qa + qa 2 TCb = 4000 + 500 qb Suppose the mvnopolist's optimal total output is Q = 200 units. What does this imply? .kPlant a will produce 114 ofthe total output. t!YPJant a will produce 1/2 of the total output. c. Plant a will shut down. d. Plant b will shut down. e. The optimal monopoly price will be \$500. f. None of the above. Questions 2 and3 refer to the info below. A competitive firm's annual total costs are: TC = 2450 + 10q + 2q2 2. In long-run equilibrium, how many units of output does this flfll1 produce? ~ 10 ~35 c. 50 d. 100 e. None of the above. 3. What is the long-run equilibrium price of this good? a.\$30 b.\$60 A\$1l0 \&\$150 e.\$210 f. None of the above. 4. Which of the strategies below works best if customers differ from one another in their preferences for goods? ~Bundling b. Two-part tariff c. Both a and b. d. Neither a nor b. 5. Which of the pricing strategies below is common in the book publishing industry? a. Perfect price discrimination @lntertemporal price discrimination c. Peak-load pricing d. Second-degree price discrimination e. Two-part tariff 6. A monopolist raised its product'S price from \$100 to \$120, but quantity sold also increased at the same time. Under which pricing strategy below would this outcome be likely? a. Intertemporal price discrimination @!>eak-Ioad pricing c. Second-degree price discrimination d. All of the above. e. None of the above.
7. and 8. Each resident of Exclusive Acres, a golf course community, has the following demand for rounds of golf: The golf course charges an annual membership fee, plus a price per round of golf played. The marginal cost

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ARE 100B - Midterm 1 Key, version B (buff) - ARE 100B M...

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