q4(2)

1. The manager of a store that can buy coffee from a supplier at ₱3 per gallon. If you consider the elasticity of demand for milk by customers at your store is −4, then your profit-maximizing price is:

• ₱2.50.

• ₱5.

• ₱2.

• ₱4.

The manager of a Petron gas station is to maximize profits. Based on your past occurrence, the elasticity of demand by Manileños for a car wash is −4, while the elasticity of demand by non- Manileños for a car wash is −6. If you charge Manileños ₱20 for a car wash, how much should you charge a man with Bataan license plates for a car wash?

• ₱20.00

• ₱15.00

• ₱18.00

• ₱1.50

Which of the following is true for perfect competition but not true for monopolistic competition and monopoly?

• P = MC and positive long run profits

• MC = MR

• P = MC

• Positive long run profits

A monopoly producing a computer chip at a marginal cost of ₱6 per unit faces a demand elasticity of −2.5. Which price should it charge to optimize its profits?

• ₱12 per unit

• ₱10 per unit

• ₱8 per unit

• ₱6 per unit

A monopoly produces small gadget at a marginal cost of ₱10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 − Q. Which of the following is the marginal revenue function for the firm?

• MR = 50 − 2Q

• MR = 100 − Q

• MR = 60 − 2Q

• MR = 50 − Q

A monopoly produces widgets at a marginal cost of ₱10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 − Q. The monopoly price is:

• ₱20.

• ₱10.

• ₱30.

• ₱40.

A monopoly produces widgets at a marginal cost of ₱10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 − Q. The demand elasticity of a small gadget at the monopoly price and quantity is:

• −2.

• −2.5.

• −1.5.

• 2.

A monopoly produces widgets at a marginal cost of ₱10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 − Q. What are the profits of the monopoly in equilibrium?

• ₱600

• ₱400

• ₱500

• ₱300

A monopoly produces small gadget at a marginal cost of ₱10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 − Q. Suppose fixed costs rise to ₱400. What happens in the market?

• The firm will reduce its output and raise price.

• The firm will shut down immediately.

• The firm continues to produce the same output and charge the same price.

• The firm will raise the price.

Which of the following is not a condition for a firm to engage in price discrimination?

• The firm has a means of identifying consumer types.

• Consumers are partitioned into two or more types, with one type having a more elastic demand than the other.

• The consumers are sincere in revealing their true natures.

• There is no resale market for the good.