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2 PART I - 25 Multiple Choice Questions – 3 marks each. 1-3. There are a group of 20 citizens; 4 of them are 10 years of age, 4 are 30 years of age, 4 are 50 years of age, 4 are 70 years of age, and the final 4 are 90 years of age. A new video game is available on the market; each of the 20 citizens is willing to pay \$100 minus his or her age (in dollars) to get this video game and each will buy only one copy of the game. For example, the 10-year-olds are willing to pay \$90 for the game (\$100 - \$10), and so on. There is a single monopoly firm, which has a total cost of producing video games given by TC = 160 + 40Q, with Q representing the quantity of video games produced. You can use this information to answer questions 1 to 3. 1. If this monopoly firm charges the same price to all its customers (i.e., a single-price monopolist), how many customers will it serve in order to maximize profit? A) 0 B) 1 C) 2 D) 3 E) 4 F) 5 G) 6 H) 7 I) 8 J) 9 K) 10 L) 11 M) 12 N) 13 O) 14 P) 15 Q) 16 R) 17 S) 18 T) 19 U) 20 V) 21 W) 22 X) 23 Y) 24 Z) none of the above 2. If this firm is able to perfectly price discriminate, how many customers will it serve in order to maximize profit? A) 0 B) 1 C) 2 D) 3 E) 4 F) 5 G) 6 H) 7 I) 8 J) 9 K) 10 L) 11 M) 12 N) 13 O) 14 P) 15 Q) 16 R) 17 S) 18 T) 19 U) 20 V) 21 W) 22 X) 23 Y) 24 Z) none of the above 3. If this firm is able to perfectly price discriminate, what will be the amount of profit it earns when it is maximizing profit? A) \$0 B) \$10 C) \$20 D) \$30 E) \$40 F) \$50 G) \$60 H) \$70 I) \$80 J) \$90 K) \$100 L) \$110 M) \$12 0 N) \$130 O) \$140 P) \$150 Q) \$160 R) \$170 S) \$180 T) \$190 U) \$200 V) \$210 W) \$220 X) \$230 Y) \$240 Z) none of the above
3 4-6. In the competitive market for cut flowers, demand is given by P = 200 – 0.1Q and supply is given by P = 20 + 0.05Q.

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