Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Name____________________
Spring 2014
Practice Exam 4
UIN_____________________
Types of elasticity
Own price elasticity and total revenue
Cost minimization condition
Profit maximization condition for labor
Short-run production feature
Profit maximization condition for quantity
Market power
Short-run decision for a perfectly competitive firm
Long-run adjustment for perfect competition industry
Characteristics for the four market structure
2. Refer to the above information. If you engage in the first-degree price discrimination, the profits are:
A.
B.
C.
D.
3. Refer to the above information. If you engage in two-part pricing, the price per unit is:
A.
B.
C.
D.
4. Refer to the above information. If you engage in two-part pricing, the fixed fee is:
A.
B.
C.
D.
5. Refer to the above information. If you engage in block pricing, the unit of the block is:
A.
B.
C.
D.
6. Refer to the above information. If you engage in block pricing, the price of the block is:
A.
B.
C.
D.
Suppose that JVC is trying to decide how to price a new stereo system composed of a receiver, CD player,
and speakers. The company's economists have estimated that two different groups will purchase these
products: students and club owners. The economists' analysis suggests that the total market for its brand of
stereos consists of 10 students and 50 club owners. In addition, it is estimated that the maximum amount
each group will pay for each stereo component is as follows:
Groups
Students
Club owners
Receiver
$250
$200
CD player
$150
$75
Speakers
$100
$250
7. Refer to the above information. If JVC charges $200 for a receiver and $125 for a CD player, the firm will
sell a receiver to:
A. students
B. club owners
C. students and club owners
D. None of the answers are correct
8. Refer to the above information. Suppose that JVC markets the receiver, CD player, and speakers together.
That is, it uses a commodity-bundle strategy such that the products are sold as one item. What price should
JVC charge to maximize revenues?
A. $500
B. $525
C. $480
D. $510
9. Snowpeak Ski Resort offers a price for a lift ticket that is barely over its marginal cost, but the high
equipment rental fee keeps generating big profits. Which pricing strategy is the management using?
A. Price discrimination
B. Two-part pricing
C. Commodity bundling
D. Cross-subsidization
10. Which of the following pricing strategies usually enhances the profits of firms with market power?
A. First-degree price discrimination.
B. Second-degree price discrimination.
C. Commodity bundling.
D. All of the above.
12. A campus auditorium sells tickets at half price to students during the last 30 minutes before a concert
starts. This is an example of
A. price discrimination.
B. peak-load pricing.
C. price discrimination or peak-load pricing.
D. none of the statements associated with this question are correct.
13. When two or more divisions mark up prices in excess of marginal cost:
A. double marginalization occurs.
B. two-part pricing occurs.
C. second-degree price discrimination occurs
D. None of the answers are correct.
15. An oligopolist has a marginal revenue curve that jumps down at 500 units of output. What kind of
oligopoly does the firm most likely belong to?
A. Sweezy.
B. Cournot.
C. Stackelberg.
D. Bertrand.
17. With linear demand and constant marginal cost, a Stackelberg leader's profits are ___________ the
follower.
A. less than
B. equal to
C. greater than
D. either less than or greater than
19. Refer to the above information. The output of the firm 1 is:
A.
B.
C.
D.
21. Refer to the above information. The output of the leader is:
A.
21
B.
23
C.
24
D.
26
22. Refer to the above information. The output of the follower is:
A.
12.5
B.
11.5
C.
12
D.
11
23. Refer to the above information. The profits of the firms are:
A.
and
B.
and
C.
and
D.
and
Consider a market consisting of two firms where the inverse demand curve is given by
where
. Each firm has a marginal cost of $50.
24. Based on this information, the market price in Bertrand model will be:
A. $275
B. $250
C. $150
D. $50
25. Based on this information, the profit of each firm in Bertrand model will be:
A. $50
B. $25
C. $10
D. $0
26. Based on this information, the market price in collusion model will be:
A. $275
B. $250
C. $150
D. $50
30. When a player randomizes over several available actions to make her current action less predictable, then
a ______________________ strategy has been played.
A. dominant strategy.
B. secure strategy.
C. mixed strategy.
D. trigger strategy.
31. A strategy that results in the highest payoff to a player regardless of the opponents action is called
A. dominant strategy.
B. secure strategy.
C. mixed strategy.
D. trigger strategy.
Refer to the following normal form game of price competition for question.
32. What is the maximum interest rate that can sustain collusion?
A. 24.3%.
B. 12.5%.
C. 78.5%.
D. 112.5%.
Player 1
Strategy
S1
S2
Player 2
T2
3, 0
2, 5
T1
4, 10
0, 8
T3
1, 3
10, 3
33. Refer to the above game, the dominant strategy for player 2:
A. is T1
B. is T2
C. is T3
D. doesnt exist.
34. Refer to the above game, the dominant strategy for player 1:
A. is S1
B. is S2
C. is S1 and S2
D. None of the above.
35. Refer to the above game, which of the following strategies constitutes a Nash equilibrium?
A. (S1, T1)
B. (S2, T2)
C. (S2, T1)
D. (S1, T3)
36. Refer to the above game, the secure strategy for player 2:
A. is T1
B. is T2
C. is T3
D. doesnt exist.
Strategy
A
B
C
2, 2
-8, 10
D
10, -8
15, 15
37. Refer to the above game, what are the Nash equilibrium strategies for this game?
A. (A, C)
B. (B, D)
C. (A, C) and (B, D)
D. None of the answers is correct.
You
Low Price
High Price
Your Rival
Low Price
High Price
(1, 1)
(50, -5)
(-5, 50)
(10, 10)
38. Refer to the above game. Suppose the game is infinitely repeated and the interest rate is 10%. What are
your profits if you and your rival cooperate?
A. $10
B. $110
C. $60
D. $50
39. Refer to the above game. Suppose the game is infinitely repeated and the interest rate is 10%. What are
your profits if you cheat?
A. $10
B. $110
C. $60
D. $50
40. Refer to the above game. Suppose the game is infinitely repeated and the interest rate is 25%. Most likely
you or your rival may choose to
A. cheat.
B. cooperate.
C. Cant be determined.
D. None of the above.