MT2_version2a_answerkey

MT2_version2a_answerkey - Econ 101: Managerial Economics...

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Econ 101: Managerial Economics Midterm Exam 2 a Winter, 2010 Professor: Huibin Yan Instructions: 1. Show your work whenever applicable. 2. Please, write clearly. Part A: Multiple Choice (choose one best answer, 4 points each) 1. A Lerner index of 0 suggests A. monopoly. B. monopolistic competition. C. oligopoly. D. perfect competition. 2. An industry is comprised of ten (10) firms, each with an equal market share. What is the 4-firm concentration ratio of this industry? A. 0.2. B. 0.4. C. 0.6. D. 0.8. 3. You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78- 15Q, where Q = Q 1 + Q 2 . The marginal cost associated with producing in the two plants are MC 1 = 3Q 1 and MC 2 = 2Q 2 . How much output should be produced in plant 1 in order to maximize profits? A. 1. B. 2. C. 3. D. 4. 4. You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost function is C = 40 + 5Q 2 . The profit-maximizing output for your firm is A. 4/5. B. 10. C. 5. D. 45. 5. In a competitive industry with identical firms, long run equilibrium is characterized by A. P = AC. B. P = MC. C. MR = MC. D. All of the statements associated with this question are correct.
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6. Firm A has a higher marginal cost than firm B's. They compete in a homogeneous product Cournot
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MT2_version2a_answerkey - Econ 101: Managerial Economics...

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