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Unformatted text preview: SECTION B: MULTIPLE CHOICE Negative marking applies with each penalty being specified next to the question. If you do not fill in E when you plan to abstain, then you will receive a penalty of 1 for that question. That is, blank answers receive a penalty of 1. Questions 1 and 2 relate to the diagram below. Revenue And cost Total Cost Total Revenue Q1 Q2 Q3 Q4 Output 1. The marginal revenue of this single price monopolist will be zero when output is [Pen. 0] A. Q1 B. Q2 C. Q3 D. Q4 E. Abstain ∂C ∂R 2. What is the output when the optimisation condition of = holds? [Pen. 1] ∂Q ∂Q A. Q1 B. Q2 C. Q3 D. Q4 E. Abstain 3 3. Consider the following statements on a natural monopoly? [Pen. 0.5] (i) The long run average cost curve is downward sloping (ii) The firm suffers decreasing returns to scale (iii) The firm’s long run marginal cost is less than its average cost (iv) Marginal cost pricing cannot be profitable Which of the following combinations are true? A. (i), and (iii) B. (iii) and (i...
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