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G-202 Exam 2|Comprehensive
Questions With Correct Answers
To achieve the socially efficient equilibrium, a firm with market power should
A. set a sales target where MR=MC and then markup price over costs according to
demand for the firm's product.
B. set a sales target where D=MC and then markup price over costs according to
demand for the firm's product.
C. set a sales target where MR=MC and then set price equal to marginal cost at
that output level.
D. set a sales target where D=MC and then set price equal to marginal cost at that
output level. - correct-answer - D
When compared to the efficiently competitive industry, the firm with significant
market power produces:
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A. too few units, giving up some units that would normally have more productive
cost than consumer value.
B. too few units, giving up some units that would normally have more consumer
value than productive cost.
C. too many units, as some units produced will have more consumer value than
productive costs.
D. too many units, as some units produced will have more productive costs than
consumer value - correct-answer - B
When firms are imperfectly price discriminating (charging different prices to
different segmented groups of consumers), which of the following statements is
true?
A. Over a given range of production, producer surplus increases as the number of
segmented consumer groups increases.
B. Over a given range of production, consumer surplus increases as the number of
segmented consumer groups increases.
C. All market surplus goes to the producers.
D. All market surplus goes to the consumers - correct-answer - A
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You are the manager of a movie theater that is the only one in a local market, so
you have strong market power. You have extensively researched your customer
base and realize you have two types of segmentable customers: (i) students who
have an elasticity of demand for movies of -2.7 and (ii) senior citizens who have
an elasticity of demand for movies of -5.1. Which of the following pricing schemes
would you employ to enhance profits?
A. Set higher prices to the students as their demand is relatively more elastic.
B. Set higher prices to the students as their demand is relatively more inelastic.
C. Set higher prices to the senior citizens as their demand is relatively more
elastic.
D. Set higher prices to the senior citizens as their demand is relatively more
inelastic - correct-answer - B
Within game theory, the condition describing a set of strategies in which no
player can improve her payoff by unilaterally changing her strategy given her
rival's strategy, is called the
G-202 Exam 2|Comprehensive
Questions With Correct Answers
To achieve the socially efficient equilibrium, a firm with market power should
A. set a sales target where MR=MC and then markup price over costs according to
demand for the firm's product.
B. set a sales target where D=MC and then markup price over costs according to
demand for the firm's product.
C. set a sales target where MR=MC and then set price equal to marginal cost at
that output level.
D. set a sales target where D=MC and then set price equal to marginal cost at that
output level. - correct-answer - D
When compared to the efficiently competitive industry, the firm with significant
market power produces:
,2|Page
A. too few units, giving up some units that would normally have more productive
cost than consumer value.
B. too few units, giving up some units that would normally have more consumer
value than productive cost.
C. too many units, as some units produced will have more consumer value than
productive costs.
D. too many units, as some units produced will have more productive costs than
consumer value - correct-answer - B
When firms are imperfectly price discriminating (charging different prices to
different segmented groups of consumers), which of the following statements is
true?
A. Over a given range of production, producer surplus increases as the number of
segmented consumer groups increases.
B. Over a given range of production, consumer surplus increases as the number of
segmented consumer groups increases.
C. All market surplus goes to the producers.
D. All market surplus goes to the consumers - correct-answer - A
, 3|Page
You are the manager of a movie theater that is the only one in a local market, so
you have strong market power. You have extensively researched your customer
base and realize you have two types of segmentable customers: (i) students who
have an elasticity of demand for movies of -2.7 and (ii) senior citizens who have
an elasticity of demand for movies of -5.1. Which of the following pricing schemes
would you employ to enhance profits?
A. Set higher prices to the students as their demand is relatively more elastic.
B. Set higher prices to the students as their demand is relatively more inelastic.
C. Set higher prices to the senior citizens as their demand is relatively more
elastic.
D. Set higher prices to the senior citizens as their demand is relatively more
inelastic - correct-answer - B
Within game theory, the condition describing a set of strategies in which no
player can improve her payoff by unilaterally changing her strategy given her
rival's strategy, is called the
