Homework Answers
1. None of the statements listed is correct
Reason: The Sweezy model of oligopoly, or the kinked demand curve model of oligopoly states that competitors always match price cuts but not price increases.
2. 6 units
Reason: At socially efficient level of output:
210-5Q = 21Q + 9Q
210 = 35Q
Q* = 6 units
3. None of the choices listed correctly answers this question
Reason: The free wifi service at these outlets is a way to attract more customers and is not a type of price discrimination
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Which of the following statements is correct regarding the Sweezy model of oligopoly? Competitors match price...
Which of the following statements is correct regarding the Sweezy model of oligopoly? • The marginal...
Which of the following statements is correct regarding the Sweezy model of oligopoly? • The marginal revenue curve of the firm is horizontal. • Competitors match price increases but do not match price decreases. • The flatter portion of the demand curve corresponds to the quantity range where competitors match price changes. • The firm faces more elastic demand when it lowers its price than when it raises its price. • None of the statements listed is correct.
1. Which of the following correctly summarizes the strategy used by firms that employ third-degree price...
1. Which of the following correctly summarizes the strategy used by firms that employ third-degree price discrimination? Group of answer choices a.The firm’s marginal revenue will be lower in the market with the more elastic demand. b.The firm sets the price higher in the market with the more elastic demand. c.The firm sets the price lower in the market with the more inelastic demand. d.The firm’s marginal revenue will be higher in the market with the more elastic demand. e.None...
There are three models of the oligopoly: The ______________, in which competitors will match any price...
There are three models of the oligopoly: The ______________, in which competitors will match any price decrease and ignore any price increase. Because of this, the elasticity of demand for higher prices is ________ elastic than the elasticity of demand for price decreases. In this model, there is no incentive for any firm to change price. Why? _____________________________________________________________ The __________- pricing model is one in which all firms agree to fix prices. Each firm finds it most profitable to charge...
With which of the following does the firm identify a key quantity by setting marginal cost...
With which of the following does the firm identify a key quantity by setting marginal cost equal to price? two-part pricing and third-degree price discrimination block pricing and commodity bundling O block pricing and two-part pricing first degree price discrimination (continuous variable case) and commodity bundling second-degree price discrimination and third-degree price discrimination Question 25 1 pts Assume the inverse demand function for a Bertrand oligopoly is P = 500 - Q/5, and that the firm's total cost function is...
Which of the following statements is correct regarding the peak-load pricing strategy? The off-peak price and...
Which of the following statements is correct regarding the peak-load pricing strategy? The off-peak price and off-peak quantity are both higher than the peak price and peak quantity. The peak price and peak quantity are both higher than the off-peak price and off-peak quantity. The peak price is lower than the off-peak price, but the peak quantity is higher than the off-peak quantity. The peak price is higher than the off-peak price, but the peak quantity is lower than the...
Which of the following statements is correct?
Which of the following statements is correct?A. The value of the marginal product curve is the labor demand curve for competitive, profit-maximizing firms.B. A competitive, profit-maximizing firm hires workers up to the point where the value of the marginal product of labor equals the wage.C. By hiring labor up to the point where the value of the marginal product of labor equals the wage, the firm is producing where price equals marginal cost.D. All of the above are correct.
Question 9 1 pts Which of the following is correct regarding penetration pricing? There is more...
Question 9 1 pts Which of the following is correct regarding penetration pricing? There is more than one answer to this question. You must mark all of the answers to receive full credit for this question. It is a strategy that is commonly found among perfectly competitive firms. It is used by firms with a long history in an industry that try to capture sales from new firms that are entering the industry. It is a strategy that is defined...
Which of the following statements is not correct? A. For a given demand curve, the profit...
Which of the following statements is not correct? A. For a given demand curve, the profit for a single-price monopolist is larger than for a monopolist that can price discriminate. B. The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing single-price monopoly firm produces a quantity of output that is smaller the socially-efficient quantity. C. The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product. D....
Which of the following statements is false? D Cost and Price E F Quantity Point A...
Which of the following statements is false? D Cost and Price E F Quantity Point A is on the marginal cost curve. When the firm chooses a level of production F, buyers will pay a price E. Point C indicates the price and quantity of production that would exist in a competitive equilibrium. Point B shows the level of demand that corresponds to the profit maximizing level of production. Because the firm described by this graph is a monopoly, production...
1) Which of the following statements regarding a monopolist is correct? A) A monopolist will only...
1) Which of the following statements regarding a monopolist is correct? A) A monopolist will only produce an output where the demand is perfectly elastic, B) A monopolist will only produce an output where the demand is elastic C) A monopolist will only produce an output where the demand is inelastic. D) A monopolist will only produce an output where the demand is unitary elastic. 2) When is a monopolist's total revenue at a maximum? A) When its marginal revenue...
With which of the following does the firm identify a key quantity by setting marginal cost equal to price? two-part pricing and third-degree price discrimination block pricing and commodity bundling O block pricing and two-part pricing first degree price discrimination (continuous variable case) and commodity bundling second-degree price discrimination and third-degree price discrimination Question 25 1 pts Assume the inverse demand function for a Bertrand oligopoly is P = 500 - Q/5, and that the firm's total cost function is...
Which of the following statements is correct regarding the peak-load pricing strategy? The off-peak price and off-peak quantity are both higher than the peak price and peak quantity. The peak price and peak quantity are both higher than the off-peak price and off-peak quantity. The peak price is lower than the off-peak price, but the peak quantity is higher than the off-peak quantity. The peak price is higher than the off-peak price, but the peak quantity is lower than the...
Question 9 1 pts Which of the following is correct regarding penetration pricing? There is more than one answer to this question. You must mark all of the answers to receive full credit for this question. It is a strategy that is commonly found among perfectly competitive firms. It is used by firms with a long history in an industry that try to capture sales from new firms that are entering the industry. It is a strategy that is defined...
Which of the following statements is false? D Cost and Price E F Quantity Point A is on the marginal cost curve. When the firm chooses a level of production F, buyers will pay a price E. Point C indicates the price and quantity of production that would exist in a competitive equilibrium. Point B shows the level of demand that corresponds to the profit maximizing level of production. Because the firm described by this graph is a monopoly, production...
1) Which of the following statements regarding a monopolist is correct? A) A monopolist will only produce an output where the demand is perfectly elastic, B) A monopolist will only produce an output where the demand is elastic C) A monopolist will only produce an output where the demand is inelastic. D) A monopolist will only produce an output where the demand is unitary elastic. 2) When is a monopolist's total revenue at a maximum? A) When its marginal revenue...
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