Reference no: EM13151067

1. A competitive industry currently consists of N= 10 identical firms. An individual firm's total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 3000-5P. In the short run, how much will each firm produce in the equilibrium?

a . q = 0

b. q =20

*c. q = 200

d. q = 2000

2. A competitive industry currently consists of N= 10 identical firms. An individual firm's total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 3000-5P. In the long run, how much will each firm produce in equilibrium?

a . q = 0

*b. q =20

c. q = 200

d. q = 2000

3. Consider a competitive where each firm's total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 3000-5P. In the long run, consumer surplus will be equal to:

a . 0

b. 2,900

c. 240,000

*d. 841,000

4. A monopolist faces a demand curve given by Q=50-(p/2) and has constant marginal (and average cost) of 16. The monopolist maximises profit by setting price equal to:

a. 16

b. 21

c. 25

*d. 58

5. Assume that individuals are homogeneous and that each has a demand curve of the following form for internet service: p=10-0.5q where p is the price per hour and q is hours per month. Assume the firm has a constant marginal cost of $1. The profit maximising two-part tariff results in the firm selling ______ hours and receiving total revenue of ________ from each consumer:

a. 9: 18.

b. 10: 18:

*c. 18: 99.

d. 10: 99.

6. Consider the market for movies in which there are two types of consumers (students and non-students) with demand curves given by the following:

Student: q=30-2p

Non students: q=30-p

If the marginal cost (and average cost) of movies is constant and equal to 8, then third degree price discriminating monopolist would sell movies to students at a price of _____ and non-students at a price of _____.

a. $7.00; $11.00

b. $11.00; $5.50

*c. $11.50; $19

d. $19; $11.50

7. A firm that produces houses has a total costs function given by the following: TC

= 144 + 4Q2. If the industry in which this firm operates is perfectly competitive, in the long run competitive equilibrium the number of houses the firm will produce is equal to:

a. 2

b. 6*

c. 16

d. 18

8. Adam, Joe and Estelle constitute the entire market for chicken. Adam's demand curve is given by

QA = 100 - 2P

Joe's demand curve is given by

QJ = 160 - 4P

Estelle's demand curve is given by

QE = 150 - 5P

Using this information, when P = 35 Adam's, Joe's, Estelle's and market demand for chicken are:

a. 30, 20, 5, 55

b. 50, 60, 25, 135

c. 30, 20, 0, 50*

d. 0, 20, 0, 20

9. Suppose a (third degree) price discriminating monopolist wishes to sell a good to two markets A and B. In market A the demand curve is PA = 20 - QA and in market B the demand curve is PB = 16 - QB . If the monopolist's marginal cost is MC = Q, then what is the profit maximizing price for each market?

a. PA = 13.33, PB = 10.67

b. PA = 10.67, PB = 13.33

c. PA = 14.5, PB = 12.5*

d. PA = 12.5, PB = 14.5

10. Consider the following information about Adam and Betty who wish to purchase season tickets for football and cricket at the Sydney Cricket Ground:

Season ticket for cricket

Adam's willingness to pay $100

Betty's willingness to pay $600

Season ticket for football

Adam's willingness to pay $700

Betty's willingness to pay $500

If bundling is permitted, the most revenue a monopolist can make from selling cricket and football season tickets is?