Multiple choice questions.
1) Which of the following statements about natural monopoly is correct?
A) A natural monopoly’s average cost is decreasing.
B) A natural monopoly’s marginal cost is decreasing.
C) A natural monopoly usually has a small fix cost.
D) Governments usually want to ban natural monopoly.
2) Which of the following statements about perfect price discrimination is correct?
A) A firm in a perfect competitive market can apply perfect price discrimination.
B) A firm charges a single price when it applies perfect price discrimination.
C) Consumers’ consumption is inefficient when a firm applies perfect price discrimination.
D) In order to apply perfect price discrimination, a firm should know each individual consumer’s maximum willingness to pay.
3) Which of …show more content…
Suppose the market demand for cell phone is . How many firms will there be in the long run equilibrium?
23) Competitive equilibrium maximize total welfare because
A) Firms make positive economic profits in the short run.
B) Firms make zero economic profit in the long run
C) Marginal value placed on the last unit by consumers equals to the marginal cost of producing that unit.
D) Firms may produce at a loss in the short run.
24) Consider the following information for a simultaneous move game: If you advertise and your rival advertises, you each will earn $5 million in profits. If neither of you advertise, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the no advertising firm will earn $1 million. If you and your rival plan to be in business for only one year, the Nash equilibrium is
A. For each firm to advertise.
B. For neither firm to advertise.
C. For your firm to advertise and the other not to advertise.
D. None of the statements associated with this question are