HW7_Soln

# HW7_Soln - Homework 7 Solution (Chapter 12: Monopoly) DUE :...

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Homework 7 Solution (Chapter 12: Monopoly) DUE : IN CLASS 7 th APRIL 2009 (Tuesday) ECON 80A Professor: Paroma Sanyal Microeconomic Theory 126 Sachar Bldg. Brandeis University (781) 736-2268 Spring 2009 psanyal@brandeis.edu Total 100 points Section 1: Multiple Choice Questions (2 points each) (18 points) 1.In the long-run profit maximizing monopolists make A) zero economic profits. D) positive or zero economic profits. B) positive economic profits. E) positive, negative or zero economic profits. C) negative economic profits. Answer: D Use the following to answer questions 2-5: P r i c e 1 2 3 4 A T C M C M R D 0 A B C Q u a n t i t y 2.In the above diagram the profit maximizing output level is A) OA. B) OB. C) OC. D) none of the above. Answer: A 3.In the diagram above, the profit maximizing price level is A) 1. B) 2. C) 3. D) 4. Answer: D 1

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4. In the above diagram the profit maximizing firm is A) making positive economic profit. C) making negative economic profit. B) making zero economic profit. D) one cannot tell. Answer: B 5.Which of the following could not be considered price discrimination? A) the issuing of discount tickets to week-end travelers. B) airlines offering super-saver fares C) movies offering cheap matinees D) senior citizen's discounts E) all of the above are cases of price discrimination Answer: E 6. The demand equation is P = 50 - Q. The marginal revenue equation for a single price monopolist is A) 25 - Q. B) 100 - 2Q. C) 50 - Q. D) 100 – Q. E) none of the above. Answer: E 7. If the owner of the firm, shown above is a profit maximizer, the firm should ______ in the short run. A) continue to operate at the existing output. B) shutdown. C) expand output to lower costs. D) do one of the three above, but more data is needed to say definitively what the firm should do Answer: A 8.In first-degree price discrimination A) the monopolist knows everyone's reservation price.
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## HW7_Soln - Homework 7 Solution (Chapter 12: Monopoly) DUE :...

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