Firms that can effectively price discriminate can increase profitability when they
engage in:
A. predatory pricing.
B. limit pricing.
C. strategies that raises rivals’ costs.
D. Any of the statements associated with this question are correct.
A student in a managerial economics class calculated the four-firm concentration ratio
and HHI for industries A and B. What is the proper conclusion she can draw from the
following findings?
A. Industry B is a monopoly.
B. The market power of firms in industry A is greater than that in industry B.
C. C4 is higher for industry A while the HHI is higher for industry B. This inconsistency
must be due to a calculation error.
D. Neither industry is perfectly competitive.
A firm can produce two products with the cost function C(Q1, Q2) = 10 + 5Q1 + 5Q2 –
0.2Q1Q2. The firm enjoys:
A. economies of scale in the two products separately.
B. economies of scope.
C. cost complementarity.
D. economies of scale in the two products separately and cost complementarity.
In the game depicted below, firms 1 and 2 must independently decide whether to charge
high or low prices.
If player 1 charges a high price when player 2 charges a low price, then player 2 earns:
A. 10
B. 5
C. -5
D. 0
Which of the following is least likely to be a normal good?
A. Steak.
B. Airline travel.
C. Bologna.
D. A house.