C211(Global Economics for Managers) SECOND
OA QUIZZES COMPLETE WITH VERIFIED
SOLUTIONS.
What is the monopoly price and quantity?
Correct Answer -Price = A; quantity = X
A monopolist's profits with price discrimination will be
Correct Answer -higher than if the firm charged just one price because the
firm will capture more consumer surplus
When deciding what price to charge consumers, the monopolist may
choose to charge them different prices based on the customers'
Correct Answer -geographical location.
A perfectly price-discriminating monopolist is able to
Correct Answer -maximize profit and produce a socially optimal level of
output
Antitrust laws have economic benefits that outweigh the costs if they
Correct Answer -prevent mergers that would decrease competition and
raise the costs of production
If government regulation sets the maximum price for a natural monopoly
equal to its marginal cost, then the natural monopolist will.
Correct Answer -earn economic losses.
,Which of the following is true about a monopolistically competitive firm?
Correct Answer -It can earn an economic profit in the short run, but not the
long run.
When a monopolistically competitive firm raises its price,
Correct Answer -quantity demanded declines but not to zero.
When a profit-maximizing firm in a monopolistically competitive market
charges a price higher than marginal cost,
Correct Answer -the firm may be incurring economic losses
When a market is monopolistically competitive, the typical firm in the
market is likely to experience a
Correct Answer -positive or negative profit in the short run and a zero profit
in the long run.
In monopolistically competitive markets, free entry and exit suggests that
Correct Answer -all firms earn zero economic profits in the long run.
The product-variety externality is associated with the
Correct Answer -consumer surplus that is generated from the introduction
of a new product
If a firm in a monopolistically competitive market successfully uses
advertising to decrease the elasticity of demand for its product, the firm
will.
Correct Answer -be able to increase its markup over marginal cost.
,According to one theory, advertising sends a signal to consumers about the
quality of the product being offered. An implication of this theory is that
Correct Answer -the existence of an expensive advertisement is more
important than the content of the advertisement.
Which of the following statements about oligopolies is not correct?
Correct Answer -Unlike monopolies and monopolistically competitive
markets, oligopolies prices do not exceed their marginal costs.
As the number of sellers in an oligopoly becomes very large,
Correct Answer -the quantity of output approaches the socially efficient
quantity
Suppose the market for this product is served by two firms that have formed
a cartel. If the marginal cost of production is $4 and each firm incurs a fixed
cost of $6, the combined profit of the cartel will be
Correct Answer -$6
When an oligopoly market reaches a Nash equilibrium,
Correct Answer -a firm will have chosen its best strategy, given the
strategies chosen by other firms in the market
As the number of firms in an oligopoly increases,
Correct Answer -the total quantity of output produced by firms in the market
gets closer to the socially efficient quantity
, Suppose that Thierry and Abdul are duopolists. Thierry is producing 700
units of output, and Abdul is producing 500 units of output. When Abdul
produces 500 units, Thierry maximizes profit by producing 700 units. When
Thierry produces 700 units of output, Abdul maximizes profit by producing
500 units. Thierry and Abdul are
Correct Answer -at a Nash equilibrium.
Suppose the owners of Lopes and HomeMax meet for a friendly game of golf
one afternoon and happen to discuss a strategy to optimize growth related
profit. They should both agree to
Correct Answer -refrain from increasing their store and parking lot sizes
Juan Pablo and Zak are competitors in a local market. Each is trying to
decide if it is better to advertise on TV, on radio, or not at all. If they both
advertise on TV, each will earn a profit of $8,000. If they both advertise on
radio, each will earn a profit of $14,000. If neither advertises at all, each will
earn a profit of $20,000. If one advertises on TV and other advertises on
radio, then the one advertising on TV will earn $12,000 and the other will
earn $10,000. If one advertises on TV and the other does not advertise, then
the one advertising on TV will earn $22,000 and the other will earn $4,000. If
one advertises on radio and the other does not advertise, then the one
advertising on radio will earn $24,000 and the other will earn $8,000. If both
follow their dominant strategy, then Juan Pablo will
Correct Answer -advertise on radio and earn $14,000.
Assume that Samorola has entered into an enforceable resale price
maintenance agreement with Trint and U-Mobile. Which of the following will
always be true?
Correct Answer -U-Mobile and Trint will always sell Samorolas for exactly
the same price
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