(1)Use the below table. If firms 3 and 4 merge, the four-firm concentration rati
ID: 2428810 • Letter: #
Question
(1)Use the below table. If firms 3 and 4 merge, the four-firm concentration ratio will:
A) decrease from 75 percent to 60 percent. B) increase from 75 percent to 80 percent. C) not change. D) increase from 60 percent to 75 percent.
(2) The below figure shows the situation of a monopolistic competitor in the short run. The maximum economic profits of the firm equal:
A) 15,000. B) zero. C) $30,000. D) $50,000.
(3) Which of the following statements is INCORRECT regarding the model for information products?:
A) In the long run, accounting profit is positive. B) Average total costs slope downward, because average variable cost is constant, average fixed cost slopes downward. C) Marginal cost equals average variable cost. D) The firm maximizes profit by setting the price of its product equal to marginal cost.
(4) Which of the following is NOT a characteristic of the demand curve faced by a firm in a monopolistically competitive market?:
A) The firm will produce where the demand curve is elastic. B) The demand curve is downward sloping. C) The slope of the demand curve is negative. D) The firm will produce where the demand curve is inelastic.
(5) In a two-sided market with network effects, the platform will likely:
A) charge a lower price for end users that are more affected by a positive market feedback. B) charge a higher price for end users that are more affected by a positive market feedback. C) charge a zero price for all end users regardless of the market feedback effects. D) randomly charge end users.
Annual Sales ($millions) 70 30 28 Firm 2 4 6 through 25 Total 10 40 200Explanation / Answer
1)ans is B. Initially concentration ratio will be 150/200=75%. after merging concentrating ratio=160/200=80%
2) ans is C. Profit=(P-AC)*Q=(10-7)*10000=30000
3)ans is D. Profit can never be maximised when P=AVC
4)ans is A. The firm produces where MR>0 thus When MR>0, point is on Upper half of demand curve which has positive elastic.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.