Quiz 3A_Solved

Quiz 3A_Solved - BSC A Microeconomics II Quiz 3A Lahore...

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Unformatted text preview: BSC A Microeconomics II Quiz 3A Lahore School of Economics Microeconomics II BSc 2 Section A Quiz 3A Total Points: 60 - 1 - Suggeste d Solutions Any queries can be emailed or discussed in class Monopolistically competitive firms face downward sloping residual demand curves because these firms A) have relatively few rivals (compared to competition). B) sell differentiated products. C) Both A and B. D) None of the above. Monopolistically competitive firms A) have market power because they can set price above marginal cost. B) have no market power because they earn zero economic profit. C) have no market power because of free entry. D) have no market power because price equals marginal cost. In the long run a monopolistic competitor A) set MR = MC. B) produces where P = AC . C) sets P > MC. D) All of the above. The above figure shows a payoff matrix for two firms, A and B, that must choose between a high- price strategy and a low- price strategy. For firm B, A) setting a high price is the dominant strategy. B) setting a low price is the dominant strategy. C) there is no dominant strategy. D) doing the opposite of firm A is always the best strategy. Which of the following is true about the demand curve facing the dominant firm? A) It equals market demand minus fringe firms' supply curve. B) It is identical to market demand. C) It equals market demand minus demand facing the fringe firms. D) It is horizontal. If all producers in a market are not cartel members, then the demand curve facing the cartel is A) the market demand curve. B) horizontal. C) identical to the demand curve in the dominant firm model. D) identical to the monopolist's demand curve. Scenario 4 Consider the following game: Vita Bars Sponsor Marathon Sponsor TV Running Show NRG Bars Sponsor Marathon 5, 9 9, 6 Sponsor TV Running Show 8, 14 3, 16 Which of the following is TRUE for the game in Scenario 4? A) NRG's dominant strategy is to sponsor the marathon. B) NRG's dominant strategy is to sponsor the TV show. C) Vita's dominant strategy is to sponsor the marathon....
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This note was uploaded on 02/13/2012 for the course ECON 121 taught by Professor Adam during the Spring '11 term at Bunker Hill.

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Quiz 3A_Solved - BSC A Microeconomics II Quiz 3A Lahore...

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