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Monopoly & Oligopoly + Monopolistic Competition

Authored by mihika kapoor

Business

University

Used 3+ times

Monopoly & Oligopoly + Monopolistic Competition
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12 questions

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1.

MULTIPLE CHOICE QUESTION

15 mins • 10 pts

he inverse demand curve the monopolist faces is
p = 100 − q
The monopolist’s cost curve is c(q) = 30 + 10q. What is the optimal
(profit-maximizing) quantity, price and profit?

Q = 45, P = 55, Profit = 1955

Q = 55, P = 45, Profit = 1955

Q = 55, P = 55, Profit = 1055

Q = 65, P = 55, Profit = 1955

2.

MULTIPLE CHOICE QUESTION

15 mins • 10 pts

A monopoly has an inverse demand curve given by
p = 16 − Q
and a constant marginal cost of $4. Calculate the deadweight loss if the
monopoly charges the profit-maximizing price.

DWL = 6

DWL = 18

DWL = 67

DWL = 8

3.

MULTIPLE CHOICE QUESTION

15 mins • 10 pts

When the marginal revenue is​ positive, demand is elastic.

True

False

4.

MULTIPLE CHOICE QUESTION

15 mins • 10 pts

When the total revenue is​ increasing, demand is elastic.

True

False

5.

MULTIPLE CHOICE QUESTION

15 mins • 10 pts

Which of the following total cost functions suggests the presence of a natural​ monopoly?


TC​ = 50Q

TC​ = 50​ + 20Q

TC​ = 50​ +

20Q^2

All of the above functions suggest the presence of a natural monopoly.

6.

MULTIPLE CHOICE QUESTION

15 mins • 10 pts

Suppose firm 1 and firm 2 produces differentiated products, with demand
functions
p1 = 112 − q1 − 0.5q2
p2 = 100 − q2 − 0.5q1
Each firm has a marginal cost of production $1 (so cost function is
C (q) = q). Find the Cournot-Nash equilibrium

q2 = 3 and q1 = 4

q2 = 30 and q1 = 46

q2 = 38 and q1 = 40

q2 = 38 and q1 = 46

7.

MULTIPLE CHOICE QUESTION

15 mins • 10 pts

wo oligopolistic firms with marginal cost MC = 10 compete in a market
with inverse demand function p = 100 − q. If they form a cartel and
produce the quantity that maximizes total profit and split the production
equally, how many units would each firm produce?

q = 20

q = 22.5

q = 45

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