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Question;41. Figure 16-1.The figure is drawn for a;monopolistically competitive firm.;MR;Demand;MC;18;12;4 8 12 16 20 24 28 32 Q;8;16;24;32;P;Refer to Figure 16-1.The firm?s profit-maximizing;level of output is;a. 8 units. c. 16 units.;b. 12 units. d. 24 units.;42. Figure 16-6;Refer to Figure 16-6. The firm depicted in panel b;faces a horizontal demand curve. If panel b depicts a profit-maximizing firm;a. it could be operating in either a perfectly competitive;market or in a monopolistically competitive;market.;b. it would not have excess capacity in its production as;long as it is earning zero economic profit.;c. it is able to choose the price at which it sells its;product.;d. the firm can always raise its profit by increasing production;since consumers will buy as much as;the firm can produce.;43. Which of the following statements is correct?;a. If duopolists successfully collude, then their combined;output will be equal to the output that;would be observed if the market were a monopoly.;b. Although the logic of self-interest decreases a duopoly?s;price below the monopoly price, it does;not push the duopolists to reach the competitive price.;c. Although the logic of self-interest increases a duopoly?s;level of output above the monopoly level;it does not push the duopolists to reach the competitive;level.;d. All of the above are correct.;44. Table 17-4.The information in the;table below shows the total demand for high-speed Internet subscriptions in a;small urban market. Assume that each company that provides;these subscriptions incurs an annual fixed cost of;$200,000 (per year) and that the marginal cost of providing;an additional subscription is always $80.;Quantity Price (per year);0 $320;2,000 $280;4,000 $240;6,000 $200;8,000 $160;10,000 $120;12,000 $ 80;14,000 $ 40;16,000 $ 0;Refer to Table 17-4. Suppose there is only one;high-speed Internet service provider in this market and it seeks to maximize;its profit. The company will;a. sell 6,000 subscriptions and charge a price of $200 for;each subscription.;b. sell 8,000 subscriptions and charge a price of $160 for;each subscription.;c. sell 10,000 subscriptions and charge a price of $120 for;each subscription.;d. sell 12,000 subscriptions and charge a price of $80 for;each subscription.;45. Refer to Table 17-4. Assume there are two;high-speed Internet service providers that operate in this market. If they are;able to collude on the quantity of subscriptions that will be sold and on the;price that will be charged for subscriptions, then their agreement will;stipulate that;a. each firm will charge a price of $120 and each firm will;sell 5,000 subscriptions.;b. each firm will charge a price of $160 and each firm will;sell 4,000 subscriptions.;c. each firm will charge a price of $100 and each firm will;sell 3,000 subscriptions.;d. each firm will charge a price of $200 and each firm will;sell 3,000 subscriptions.;46. Refer to Table 17-4. Assume there are two;profit-maximizing high-speed Internet service providers operating in this market.;Further assume that they are able to collude on the quantity of subscriptions;that will be sold and on the price that will be charged for subscriptions. How;much profit will each company earn?;a. $80,000 c. $160,000;b. $120,000 d. $210,000;47. Refer to Table 17-4. Assume there are two;profit-maximizing high-speed Internet service providers operating in this;market. Further assume that they are not able to collude on;the price and quantity of subscriptions to sell. How many;subscriptions will be sold altogether when this market;reaches a Nash equilibrium?;a. 6,000 c. 10,000;b. 8,000 d. 12,000;48. Refer to Table 17-4. Assume there are two;high-speed Internet service providers operating in this market. Further assume;that they are not able to collude on the price and quantity of subscriptions to;sell. What price will they charge for a subscription when this market reaches a;Nash equilibrium?;a. $120 c. $200;b. $160 d. $240;49. Refer to Table 17-4. Assume that there are;two profit-maximizing high-speed Internet service providers operating in this;market. Further assume that they are not able to collude on the price and;quantity of subscriptions to sell. How much profit will each firm earn when;this market reaches a Nash equilibrium?;a. $120,000 c. $200,000;b. $150,000 d. $225,000;50. If an oligopolist is part of a cartel that is;collectively producing the monopoly level of output, then that oligopolist has;the incentive to lower production with the aim of;a. lowering prices.;b. increasing profits for the group of firms as a whole.;c. increasing profits for itself, regardless of the impact;on profits for the group of firms as a whole.;d. None of the above is correct.

 

Paper#57933 | Written in 18-Jul-2015

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