Reference no: EM131593859

True or False? Why?

1. Two part tariffs always involve setting the price per unit above marginal cost.
2. If a monopolist is able to set different prices based on observable characteristics of its customers the firm will set the higher price in the market where demand is more elastic.
3. If a monopolist is able to price discriminate it will also be the case that marginal cost is different in each market.
4. Price discrimination increases the deadweight loss over that in monopolized markets where there is just one price.
5. Given that price discrimination results in different prices being set in different markets served by a monopolist marginal revenue will be different in each market as well.
6. Monopolists may choose not to price discriminate even if they are able to do so.
7. In a Cournot duopoly market the equilibrium output choices of each firm is not a Nash equilibrium given that firms are choosing profit maximizing strategies.
8. Firms set different output prices if they are engaging in Betrand competition.
9. Oligopoly deadweight losses are greater than those for single price monopolists if marginal cost and demand is the same in both markets.
10. As the number of identical firms in a market characterized by oligopoly increases the price will converge to that in a perfectly competitive industry.
11. Mergers that lower marginal cost can simultaneously increase price and lower deadweight loss. 
12. Collusion between firms usually results in lower prices but higher profits for the firms engaging in the collusive behaviour.