ARE 100b Mt 1 sample

ARE 100b Mt 1 sample - ARE 100B M. Whitney FIRST M IDTERM S...

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ARE 100B M. Whitney FIRST MIDTERM N~E: ______________________________ __ 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 2008 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 (25% of total grade)
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Section A 1. Shennan is a marketing analyst for a movie theater chain. He estimates that students have a price elasticity of demand for movies of -4, while other customers' price elasticity of demand is -2. Marginal costs are the same for each type of customer. What policy should he recommend to improve the theater's profits? a. Students should receive a 25% discount. b. Students should receive a 33% discount. c. Students should receive a 50% discount. d. Students should receive a 75% discount. 2. A multiplant monopolist owns two factories, with cost functions:. TC I = 100 + 30*q, + 2q/ TC 2 = 100+ 20*~ + ~2 Suppose you observe that both plants are operating. What does this imply? a. Marginal revenue must be between $20 and $30. b. Plant I must be producing less than plant 2. c. Both a and b. d. Neither a nor b. 3. What is the main source of market power for leading firms in the pharmaceuticaJ (drug) industry? a. Economies of scaJe b. Control of scarce inputs to production c. Patents d. Copyright 4. Which of the following pricing strategies would likely be most difficult for a firm to implement in the real world?
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ARE 100b Mt 1 sample - ARE 100B M. Whitney FIRST M IDTERM S...

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