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1. Which of the following is NOT a characteristic of a private good?
A. rivalry in consumption
B. benefits of consumption are non-excludable
C. consumption of the good precludes consumption by another individual
D. the benefits to a consumer of consuming the good are exclusive to that individual
2. Horizontal summing of individual demands yields
A. the market demand for a private good
B. the market supply of a private good
C. the market demand for a public good
D. the market supply of a public good
You are the owner of a car dealership and you practice “no haggle” sales policy. Last year, you made a record profit of GHC 1.5 million. Your dealership competes in a market with price elasticity of demand of -1.3. Your marginal cost is GHC 12000. How much should you charge to maintain your record profit?
Two firms in a homogeneous-product duopoly market (firm 1 and firm 2) have the following cost and demand functions: TC1=4q1; TC2=4q2 and Q=40-P; Q=q1+q2. a) Derive the reaction function/best-response function for each firm. b) Assume that the firms play a simultaneous move game. Characterize the Nash Equilibrium. c) Suppose the two firms play game is a sequential game with the following timing of events: 1. Firm 1 chooses output 2. Firm 2 observes firm 1’s output and then chooses output Characterize the Nash equilibrium of this sequential move game.
You are the manager of a monopoly. A typical consumer’s inverse demand function for your firm’s product is 𝑃 = 250 − 4𝑄 and your cost function is 𝐶(𝑄) = 10𝑄. a) Determine the profit-maximizing quantity, and price under standard monopoly pricing. b) Determine the optimal two-part pricing strategy. c) Suppose you want to use block pricing strategy. How many units should you put in a block and what price you should charge for the block? d) Compare your profits from parts (a), (b) and (c)
According to the equation Q = 0.38P, where Q is the quantity supplied and P is the price of the good measured in dollars, the
A.
quantity supplied rises by 38 units as the price increases by $1.
B.
quantity supplied rises by 38 percent of the price increase.
C.
the number of units supplied rises by 3.8 percent as the price increases by $1.
D.
quantity supplied falls by 0.38 units as the price increases by $1
E.
slope of the supply curve equals 38.
According to the equation Q = 16 + 0.2P, where Q is the quantity supplied and P is the price of the good measured in dollars, the
A.
quantity supplied equals 20 percent of the price.
B.
quantity supplied rises by 16 units as the price increases by $1.
C.
quantity supplied rises by 0.2 units as the price increases by $1.
D.
quantity supplied rises by 3.2 units as the price increases by $1.
E.
slope of the supply curve equals 16.
Suppose ABC Corp. spends $200,000 per year on some basic level of advertising, regardless of its revenues. In addition, the company spends 35 percent of each dollar of revenue on extra advertising. Write a mathematical equation that describes the functional relation between advertising (A) and revenue (R).
A=
(Enter your response as an expression.)
.The price for a good A has risen from 175 rub. to 210 rub. The demand for a good B has increased from 5400 units to 7100 units. Calculate the cross- price elasticity of demand?
In the long run scenario why is a perfectly competitive market considered to be more
efficient than a monopolistic competition market when firms in both the markets make
normal profits in the long run? Use graphical illustrations to explain your answer.
Do you consider concentration in banking a positive?
