What is the level of net benefits when four units are produced?
A. 0
B. 70
C. -70
D. 20
Your firm produces two products, Q1 and Q2. An economic consulting firm has
estimated your cost function to be
a. Are there economies of scope?
b. Are there cost complementarities?
c. Your market for Q1 is not very good, and an overseas firm has offered to buy the
division of your company that produces Q1. What will happen to your marginal cost of
producing Q2 if you sell the division?
The special cost structure that is necessary for a firm to adopt a peak-load pricing policy
is:
A. economies of scale.
B. economies of scope.
C. constant marginal cost.
D. limited capacity.
You are a manager in a perfectly competitive market. The price in your market is $35.
Your total cost curve is C(Q) = 10 + 2Q + .5Q2.a. What level of output should you
produce in the short run?b. What price should you charge in the short run?c. Will you
make any profits in the short run?d. What will happen in the long run?e. How would
your answer change if your costs were C(Q) = 80 + 5Q + 30Q2?
A lump-sum tariff imposed on foreign competitors will:
A. always remove foreign competitors from the market.
B. increase the profits of domestic firms when demand is high.
C. have no impact on domestic firms’ profits when demand for domestic goods is high.
D. decrease the profits of domestic firms when demand is high.
Vertical integration:
A. occurs when a firm purchases its inputs in a market.
B. is attractive when relationship-specific exchange is unimportant.
C. occurs when a firm produces its own inputs.
D. is a spot exchange phenomenon.
Consider two firms competing to sell a homogeneous product by setting price. The
inverse demand curve is given by P = 15 – Q. Firm 1 has MC1(Q1) = 1 and firm 2 has
MC2(Q2) = 1.05. Based on this information, we can conclude that the market price will
be:
A. $1 and each firm will produce 7 units.
B. $1.05 and each firm will produce 6.975 units.
C. $1.04 and firm 1 will produce 13.96 units and firm 2 will produce 0 units.
D. $1 and firm 1 will produce 14 units and firm 2 will produce 0 units.
Which of the following conditions are necessary for the existence of a Nash
equilibrium?
A. The existence of dominant strategies for both players.
B. The existence of a dominant strategy for one player and the existence of a secure
strategy for another player.
C. The existence of a secure strategy for both players.
D. None of the answers is correct.
An ad valorem tax causes the supply curve to:
A. shift to the right.
B. become flatter.
C. become steeper.
D. shift to the left.
Consider a market consisting of two firms where the inverse demand curve is given by
P = 500 – 2Q1 – 2Q2. Each firm has a marginal cost of $50. Based on this information,
we can conclude that aggregate profits in the different equilibrium oligopoly models
will follow which of the following orderings?
A. Bertand > Collusion > Stackelberg > Cournot
B. Collusion > Cournot > Stackelberg > Bertand
C. Collusion > Stackelberg > Cournot > Bertand
D. None of the answers is correct.