Sample paper session 1_2011(3)-1

Sample paper session 1_2011(3)-1 - S ample paper Note: not...

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Sample paper Note: not 30 questions have been included here. Look at the on line Quizzes for revision questions. PART A This section is worth 30 marks Answer all the questions in Part A on the answer sheet provided, using pencil only: Question 1 Which of the following statements is true ? (a) A profit maximising monopolist will always set price and output at a level where demand is price elastic. X (b) A profit maximising monopolist always produces where Average Revenue equals Average Cost (c) A profit maximising monopolist will, in long run equilibrium, always use a scale of plant that minimises long run Average Costs. (d) A profit maximising monopolist will always produce where marginal cost is greater than price. Question 2 Assume two rival car rental companies ( Ace Rentals and Bob’s Rentals ) are considering whether to discount their rates as a method of increasing market share. The following pay-off matrix gives the expected monthly profits (in $’000) of each company ( Ace, Bob’s ) under alternate strategies: BOB’S Discount Do Not Discount Discount (12, 10)
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This note was uploaded on 07/30/2011 for the course ECON 1101 taught by Professor Julia during the Three '08 term at University of New South Wales.

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Sample paper session 1_2011(3)-1 - S ample paper Note: not...

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