ECN 212 FINAL EXAM QUESTIONS WITH 100% CORRECT ANSWERS 2024/2025 UPDATE
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Course
ECN 212
Institution
ECN 212
ECN 212 FINAL EXAM QUESTIONS WITH 100% CORRECT ANSWERS 2024/2025 UPDATE
Since a competitive firm sets MR = P to determine all quantities in the short run, we can conclude that: - Answer- the demand curve faced by each individual competitive firm is perfectly elastic.
Suppose that a firm in a...
ECN 212 FINAL EXAM QUESTIONS
WITH 100% CORRECT ANSWERS
2024/2025 UPDATE
Since a competitive firm sets MR = P to determine all quantities in the short run, we can
conclude that: - Answer- the demand curve faced by each individual competitive firm is
perfectly elastic.
Suppose that a firm in a perfectly competitive industry has the following marginal cost
curve: MC = 4Q + 18. If the market price for the good they produce is $47.7, how many
units of this good will the firm produce? - Answer- 7.43
Suppose a firm in a perfectly competitive market has total costs equal to 5Q2 + 5Q +
15. If this firm is earning zero economic profits, and is producing 10 units of the good,
what must the market price be? - Answer- 56.50
A monopolist can sell 300 units of output for $29.00 per unit. Alternatively, it can sell
301 units of output for $28.25 per unit. The marginal revenue of the 301st unit of output
is: - Answer- -196.75
The economic inefficiency of a monopolist can be measured by the: - Answer-
deadweight loss involved relative to a competitive firm
In Chicago's Southside (and other places), auto mechanics (who work outside the
formal sector, without a business license, advertising, or even a garage) will do work for
gang members without charging them. In exchange, gang members chase away other
mechanics who wish to operate in the area. These auto mechanics have monopoly
power; what type of source does it come from? - Answer- barriers to entry
A firm with no competitors: - Answer- still faces a downward-sloping demand curve
When a monopolist's demand curve is inelastic, raising the price: - Answer-
INCREASES total revenue and DECREASES total cost
Suppose a monopolist faces the demand curve P = 117 - 2Q. The monopolist's
marginal costs are a constant $20 and they have fixed costs equal to $56. Given this
information, what will the profit-maximizing price be for this monopolist? - Answer- 68.50
, Suppose a monopolist faces the demand curve P = 198 - 3Q. The monopolist's
marginal costs are a constant $28 and they have fixed costs equal to $142. Given this
information, what are the maximum profits this firm can earn? - Answer- 2266.33
Suppose a monopolist faces the demand curve P = 100 - 3Q. The monopolist's
marginal costs are a constant $21 and they have fixed costs equal to $87. Given this
information, if the firm maximizes their profits, what would be size of the deadweight
loss in this market? - Answer- 260.04
Hewlett Packard's pricing scheme is to sell printers at relatively low price and ink
cartridges at relatively high price. This practice is known as: - Answer- tying
Pfizer sells Atgam in New Zealand for $14 per pill and in Brazil for $8 per pill. This
implies that the demand curve in New Zealand must be ________ than in Brazil. -
Answer- more inelastic
If students in the United States go online and import the much cheaper Indian version of
your textbook instead of buying the American edition, how might this arbitrage
nevertheless help the publisher of your textbook? - Answer- The students who go to the
trouble to do this might have had low willingness-to-pay in the first place, so the
arbitrage enables another layer of price discrimination.
In the case of a perfectly price-discriminating monopoly, there is: - Answer- zero
consumer surplus
On Black Fridays, most retail outlets have major storewide sales. Yet, as one of the
busiest shopping days in the United States, one would expect prices to increase, not
decrease. Price discrimination explains the answer to this question because price: -
Answer- insensitive shoppers will stay away to avoid the crowds.
Adults have more money than teenagers and perhaps more inelastic demand for video
games than teenage video gamers. Why might it be difficult to price discriminate based
on this fact? - Answer- teenage gamers could exploit arbitrage opportunities, buy games
at low price, and re-sell them to adult gamers
A sales manager at a car dealership revealed that he considers how much the customer
appears to know about the car when he's negotiating a price. Ignorant people tend to
pay a premium on their car. Price discrimination explains this "ignorance premium"
since people who: - Answer- don't bother to research are probably less sensitive to
price.
A monopolist is seeking to price discriminate by segregating the market. The demand in
each market is given as follows: - Answer- 80.00
A monopolist is seeking to price discriminate by segregating the market. The demand in
each market is given as follows:
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