economics data bank

| August 14, 2017

13.The
following table provides information on the price, quantity, and average cost
for a
monopoly. At what price will the firm maximize its profit?
Price Output ATC
$5 0 ??
$4 4 $1.00
$3 8 $0.75
$2 12 $0.75
$1 16 $0.81
$0 20 $0.90
a.$1
b.$2
c.$3
d.$4

14George and
Jerry are competitors in a local market. Each is trying to decide if it is
better to advertise on TV, on radio, or not at all. If they both advertise on
TV, each will earn a profit of $3,000. If they both advertise on radio, each
will earn a profit of $5,000. If neither advertises at all, each will earn a
profit of $10,000. If one advertises on TV and the other advertises on radio, then
the one advertising on TV will earn $4,000 and the other will earn $2,000. If
one advertises on TV and the other does not advertise, then the one advertising
on TV will earn $8,000 and the other will earn $5,000. If one advertises on
radio and the other does not advertise, then the one advertising on radio will
earn $9,000 and the other will earn $6,000. If both follow their dominant
strategy, then George will
a.advertise
on TV and earn $3,000.
b.advertise
on radio and earn $5,000.
c.advertise
on TV and earn $8,000.
d.not
advertise and earn $10,000.

Table 1.The information in the table below shows
the total demand for premium?channel
digital cable TV subscriptions in a small urban market. Assume that
each digital cable TV
operator pays a fixed cost of $200,000 (per year) to provide premium
digital channels in the
market area and that the marginal cost of providing the premium
channel service to a
household is zero.
Quantity Price (per year)
0 $180
3,000 $150
6,000 $120
9,000 $ 90
12,000 $ 60
15,000 $ 30
18,000 $ 0

15.Refer
to Table 1. Assume there are
two profit?maximizing digital cable TV companies operating in this market.
Further assume that they are not able to collude on the price and quantity of premium
digital channel subscriptions to sell. What price will premium digital channel
cable TV subscriptions be sold at when this market reaches a Nash equilibrium?
a.$30
b.$60
c.$90
d.$120

16.Refer
to Table 1. Assume there are
two profit?maximizing digital cable TV companies
operating in this market. Further assume that they are not able to collude
on the price and
quantity of premium digital channel subscriptions to sell. How many
premium digital channel cable TV subscriptions will be sold altogether when
this market reaches a Nash equilibrium?
a.6,000
b.9,000
c.12,000
d.15,000

17.Refer to Table 1. Assume that there are two profit?maximizing digital cable TV
companies operating in this market. Further assume that they are not able to
collude on the price and quantity of premium digital channel subscriptions to
sell. How much profit will each firm earn when this market reaches a Nash
equilibrium?
a.$25,000
b.$90,000
c.$160,000
d.$215,000

18.A
monopolist
a.has a
supply curve that is upward?sloping, just like a competitive firm.
b.does not
have a supply curve because the monopolist sets its price at the same
time it chooses the quantity to supply.
c.has a
horizontal supply curve, just like a competitive firm.
d.does not
have a supply curve because marginal revenue exceeds the price it
charges for its products.

19.One advantage
of allowing a market for pollution permits to control the total amount of
pollution released in an area is that
a.the
government knows exactly how much each firm is allowed to pollute.
b.government
revenue from the sale of permits is greater than revenue from a
Pigovian tax.
c.the initial
allocation of permits to firms does not affect the efficiency of the
market.
d.firms will
work together to eventually eliminate pollution.

20.Suppose
when a monopolist produces 75 units its average revenue is $10 per unit, its
marginal revenue is $5 per unit, its marginal cost is $6 per unit, and its
average total cost is $5 per unit. What can we conclude about this monopolist?
a.The
monopolist is currently maximizing profits, and its total profits are $375.
b.The
monopolist is currently maximizing profits, and its total profits are $300.
c.The
monopolist is not currently maximizing profits; it should produce more units
and charge a lower price to maximize profits.
d.The
monopolist is not currently maximizing profits; it should produce fewer units
and charge a higher price to maximize profits.

21.In a
competitive market with identical firms,
a.an increase
in demand in the short run will result in a new price above the
minimum of average total cost, allowing firms to earn a positive
economic profit
in both the short run and the long run.
b.firms
cannot earn positive economic profit in either the short run or long run.
c.firms can
earn positive economic profit in the long run if the long?run market
supply curve is upward sloping.
d.free entry
and exit into the market requires that firms earn zero economic profit
in the long run even though they may be able to earn positive economic
profit in
the short run.

22.The supply
curve of a perfect competitor in the short run is:
a.Marginal
revenue curve.
b.Marginal
cost curve.
c.Average
revenue curve
d.Marginal
cost curve above its average variable cost curve

23.A
monopolistically competitive firm faces a demand curve, P=20?Q, and earns zero
profit. The firm produces at a constant marginal cost of 2. What is the fixed
cost for this firm?
a.18
b.64
c.81
d.Cannot be
determined from the information given.

24.At 47 units
of labor, a firm finds that average product of labor equals 39.6 and marginal
product of labor equals 32.9. We can conclude that the average product curve at
47 units of labor is:
a.upward?sloping.
b.horizontal.
c.vertical.
d.downward?sloping.

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