Suppose the inverse market demand is given by P = 20 – Q. If the incumbent continues
to produce eight units of output, which of the following equations best summarizes the
potential entrants residual demand curve?
A. P = 12 – Q
B. P = 8 – Q
C. P = 20 – 12Q
D. P = 12 – 8Q
Which is more preferred between a cash gift and an in-kind gift?
A. A cash gift.
B. An in-kind gift.
C. Both are equally preferred.
D. None of the statements is correct.
If a firm manager has a base salary of $50,000 and also gets 2 percent of all profits,
how much will his/her income be if revenues are $8,000,000 and profits are
$2,000,000?
A. $250,000
B. $210,000
C. $90,000
D. $150,000
Refer to the normal-form game of price competition shown below.
Which of the following represents firm Bs full strategy space?
A. {A, C}
B. {A, B}
C. {(A, C), (A, D), (B, C), (B, D)}
D. {C, D}
Suppose the cost function is C(Q) = 50 + Q – 10Q2 + 2Q3. What is the variable cost of
producing 10 units?
A. $401
B. $1,060
C. $560
D. $1,010
Which of the following is a factor(s) affecting collusion in an infinitely repeated pricing
game?
A. Number of firms
B. Firm size
C. History
D. All of the statements associated with this question are correct.
Which of the following integration types exploits economies of scope?
A. Vertical integration
B. Horizontal integration
C. Cointegration
D. Conglomerate integration
Consider the following innovation game: Firm A must decide whether or not to
introduce a new product. Firm B must decide whether or not to clone firm As product.
If firm A introduces and B clones, then firm A earns $1 and B earns $10. If A introduces
and B does not clone, then A earns $10 and B earns $2. If firm A does not introduce,
both firms earn profits of 0. How many Nash equilibria are there for this game?
A. 0
B. 1
C. 2
D. 0, but there are secure strategies.
Which of the following pricing policies does NOT extract the entire consumer surplus
from the market?
A. First-degree price discrimination
B. Peak load pricing
C. Two-part pricing
D. Block pricing
There are many different models of oligopoly because:
A. beliefs play an important role in oligopolistic competition.
B. firms do not maximize profits in oligopolistic competition.
C. oligopoly is the most complicated type of market structure.
D. beliefs play an important role in oligopolistic competition and oligopoly is the most
complicated type of market structure.
An oligopolist has a marginal revenue curve that jumps down at 500 units of output.
What kind of oligopoly does the firm most likely belong to?
A. Sweezy
B. Cournot
C. Stackelberg
D. Bertrand