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Unformatted text preview: If the market is controlled by a
perfect-price-discriminating monopoly, producer surplus equals
' !! A)
D) A + B + C + D + E.
D + E.
zero. 59. Which of the following is an example for multi-market price discrimination?
A) A BMW selling for more than a VW.
B) Local residents receiving a discount at the local golf course.
C) The fact that a razor is cheap and blades are expensive.
D) A hotel charging more for a room if the customers bring pets.
60. A multimarket price discriminator sells its product in Florida for three times the price it sets
in New York. Assuming the firm faces the same constant marginal cost in each market and
the price elasticity of demand in New York is -2.0, the demand in Florida
A) has an elasticity of -6.0.
B) is more price elastic than the demand in New York.
C) has an elasticity of -1.2.
D) has an elasticity of -0.67.
(HINT: see equation 12.2)
61. If the demand for air travel were to change so that business travelers and vacationers have
the same price elasticity of demand for air travel,
A) airlines would charge the same price to each type of flyer.
B) airlines would still charge business flyers a higher fare since the travelerʹs employer
C) airlines would be driven out of business.
D) airlines would counter by charging vacationers a higher fare.
62. Perfect competition and monopolistic competition are similar in that both market structures
A) price-taking behavior by firms.
B) a homogeneous product.
C) no barriers to entry.
D) very few firms.
63. A competitive market structure differs from the monopoly, oligopoly, and monopolistic
competition structures in the
A) producersʹ ability to set price.
B) profit maximization condition.
C) amount of long run profit.
D) entry conditions.
64) Oligopoly differs from monopolistic competition in that an oligopoly includes
A) product differentiation.
B) barriers to entry.
C) no barriers to entry.
D) downward-sloping demand curves facing the firm.
65) If a cartel is unable to monitor its members and punish those firms that violate the
A) the member firms will each act as price setters.
B) the cartel will prosper in the long run.
C) the market will become a monopoly.
D) the cartel will fail. 66) Compared to a cartel, firms in a Cournot Oligopoly
A) make more joint profit.
B) sell less output.
C) make less joint profit.
D) act independently. ! !"#!$%&!'"((")*+,-!.(&/0&!/+0)&#!"1#2&"!"#!"!/(0&"!/+3!&4.(/*+!)%56!
67. The above figure shows the reaction functions for two pizza shops
-&'3/0,9! in a small isolated town.
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