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1.Refer to the table above. Suppose that the monopolist is regulated and forced to charge anallocatively efficient price. What will be the price and

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1.Refer to the table above. Suppose that the monopolist is regulated and forced to charge anallocatively efficient price. What will be the price and output?

a. $85 and 4

b. $80 and 5

c. $75 and 6

d. $70 and 4

е. $65 and 8


2.Refer to the table above. Suppose that the monopolist is regulated and forced to charge anallocatively efficient price. What will be the level of profit or loss?

a. $0

b. loss of $3.

c. loss of $25.20

d. profit of $12

e. profit of $60


3.Refer to the table above. Suppose that the monopolist is regulated and forced to charge a fair-return price. What will be the price and output?

a. $85 and 4

b. $80 and 5

c. $75 and 6

d. $70 and 4

е. $65 and 8


4.In order to practice price discrimination a firm must be in a market such that the consumers inits market: .

a. all have identical tastes.

b. all have identical price elasticities of demand.

c. have different price elasticities of demand.

d. have the same demand for its product.


5. Suppose that each of the following goods and services are provided by a different monopoly .In which case will it be the easiest to engage in price discrimination?

a. apples

b. haircuts

c. beer

d. computers


6.In general, firms in a cartel:

a. agree to set a price equal to marginal cost.

b. do not consider the actions of the other firms in the cartel when making output decisions.

c. produce levels of output exceeding the monopoly output level.

d. agree to charge the price the monopolist would charge.


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7. Refer to the above diagram. Becky's dominant strategy is_______and David's dominant strategy is ________

a. high; high

b. low; low

c. high; low

d. low; high


8. Refer to the above diagram. If Becky and David could coordinate their decisions then:

a. they would each earn profits of 100.

b. they would both choose to charge a low price and earn profits of 90 each.

c. they would both choose to charge a high price and earn profits of 90 each.

d. they would both choose to charge a high price and earn profits of 70 each.


9. Refer to the above diagram. The dilemma in the prisoner' 's dilemma is that:

a. one of the players cannot get to the best outcome.

b. both players would be better off by not confessing, but confessing is a dominant strategy

c. both players would be better off by confessing, but not confessing is a dominant strategy.

d. the player with the first mover advantage always gets the better outcome.


10. If two firms use a tit-for- tat scheme to maintain cartel pricing and one firm chooses a high

price in the current time period then:

a. that firm will also choose a low price in the next time period.

b. that firm will also choose a high price in the next time period.

c. the other firm will choose a low price in the next time period

d. the other firm will choose a high price in the next time period.


11.One potential advantage that a monopoly might have over perfect competition is:

a. almost always a lower price.

b. almost always a higher output.

c. diseconomies of scale.

d. possibly an increased incentive to do innovative research.


12.What is true about the long. run equilibrium price of a monopolistically competitive firm?

a. It will equal average cost and exceed marginal cost.

b. It will equal both average cost and marginal cost.

c. It will equal marginal cost and exceed average cost.

d. It will exceed both average cost and marginal cost.

е. It will equal both marginal cost and marginal revenue.


13.Suppose in the city of Blacksburg, music stores operate in a monopolistically competitive market. If the price of CDs in Blacksburg is currently equal to $20 per CD and the averagecost of CDs is $15, in the long run we expect the price of CDs to:

а. increase.

b. stay the same.

c. decrease, and the average cost of producing CDs to increase.

d. decrease, and the average cost of producing CDs to decrease.


is thae answers are

1 C

2 I have know idea

3-5 B C D

6-10 B B C C C

11-13 E B C

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