Please put numbers next to answers...thank you!!! Part I: Multiple-Choice Questi
ID: 1130081 • Letter: P
Question
Please put numbers next to answers...thank you!!! Part I: Multiple-Choice Questions (3 points each, 15 points total 1. When p-$7, which of the following statements is CORRECT in the short run for a perfectly competitive firm with the cost structure described by TC = 2q2+3q+15? (a) The firm produces q=1 with a loss (b) The firm produces q=1 with a positive profit (c) The firm produces q=1 with zero profit (d) The firm shuts down 2. Which of the following statements is TRUE for the third-degree price discrimination? (a) I always hurts social welfare (b) It always improves social welfare (c) always hurts consumer surplus as the producer takes advantage of its information on consumers' willingness-to-pay (d) It improves the welfare of some consumer group(s) but not the other(s) 6-0, the deadweight loss 3. For a monopoly that faces MC-2 and a market demand due to its monopolistic market power is (a) 3 (b) 2 (c) I (d) 0 4. With product differentiation, which of the following competition model(s) wll allow for market power? (a) Monopolistic competition (b) Bertrand competition (c) Competition in experience good markets where firms enter sequentially (d All of the above 5. The ultimate goal of government regulation on businesses is to (a) improve efficiency and social welfare (b) redistribute income (c) recover the equity across various social groups (d) enforce rules and lawsExplanation / Answer
1 ) In Perfect Competition Equilibrium will be at P = MC ( marginal cost)
TC = 2q2 +3q +15 and P = 7
Differentiating TC with respect to q to get MC
MC = 4q + 3
4q+3 = 7
4q = 4
q = 1
The firm produces q = 1 with zero profit. So option c is correct.
2) Option d is correct. Third degree price discrimination improve the welfare of some consumer group(s) but not the other (s)
3) The deadweight loss due to its monopolist market power is 3. Option a is correct
4) Option d is correct.
5) The ultimate goal of the government regulation on businesses is to improve efficiency and social welfare. So option a is correct.
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