MARKET STRUCTURE 3

Predatory pricing can be defined as......

• pricing below AVC to remove competitors within the market

• pricing below AVC to deter new entrants to the market

• pricing between profit max and normal profit

• pricing at normal profit to flood the market with your product

• pricing at mr=mc

Limit pricing can be defined as..........

• pricing below AVC to get rid of existing competitors

• pricing at normal profit

• pricing between profit max and normal profit to deter new entrants

• pricing at mr=0

• pricing at mc=mr

Advertising could be described as what type of cost?

• variable

• semi-variable

• marginal

• sunk

• opportunity

nash equilibrium occurs at the outcome where there is......

• no tendency to change

• tendency to change

• maximum joint profits

• maximum individual profits

• none of the above

In game theory firms have an incentive to collude so that they can......

• maximise normal profits

• maximise revenue

• maximise profits

• maximise joint or combined profits

• maximise output

tacit collusion involves...........

• a formal agreement

• a formal handshake

• a formal nose rub

• no formal or verbal agreement

• none of the above

A dominant monopoly is where.............

• one firm controls at least 25% market share

• one firm controls at least 40% market share

• only 1 supplier in the market

• low market concentration

One benefit or a profit max monopoly is........

• diseconomies of scale

• external economies of scale

• x inefficiency

• potential for dynamic efficiency

• low prices

What happens to consumer surplus with first degree price discrimination?

• Increases

• Decreases

• Removed

• None of the above

Which one of the following is an example of second degree price discrimination?

• Price reductions on out of season clothing

• Student discount

• Business class travel

• Cheaper price tickets for women