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Economics True or False




Question;Decide whether each of the following statements is True, False or Uncertain, and give a brief but clear explanation to support your answer:A) A Monopolist?s long run supply curve is that portion of its long-run marginal cost curve above its long-run average total cost curve.B) Whenever a firm has market power and can set its own output prices, deadweight loss will ocurr. Therefore, any firm having market power reduces economic efficiency compared to a perfectly competitive market outcome.C) Lady D is planning to bid on an antique piece of fine jewerly in a second price sealed bid auction. Lady D?s private value for the antique jewerly is $10,000. Lady D should bid no more than $10,000 for the antique jewerly.D) Deductibles and cost sharing copayments are tools used by insurers to mitigate or counter the effects of consumers? adverse selection into health care insurance plans.E) Greater diversity among suppliers makes collusion more likely to emerge, since there is more likely to be something for everyone in the market.F) The demand for refrigerators is characterized by a partial adjustment process (inertia). Suppose a $250 tax is imposed on new refrigerators. The share of the burden of this tax borne by consumers (as opposed to producers) will rise.G) Consider a Cournot game in which a Prisioners? Dilemma like payoff matrix is repeated a known finite number of times. In such case, a tit-for tat strategy is optimal.H) If a firm having market power charges a price for its output that is less than its marginal cost, it should shut down and cease production.


Paper#55466 | Written in 18-Jul-2015

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