ECON510-1900-SP11: 9th Assignment
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UNVA-Online► ECON510-1900-SP11► Quizzes► 9th Assignment► Review of attempt 2
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Sunday, June 12, 2011, 10:11 PM Sunday, June 12, 2011, 10:57 PM 46 mins 14 secs 22/30 3.67 out of a maximum of 5 (73%)
A cartel is defined to be
Marks: 1
Choose one answer.
a. a form of oligopoly in which firms formally agree to establish a common price, in effect acting like a monopoly. b. a form of oligopoly in which firms agree to sell at different prices like in monopolistic competition. c. a form of oligopoly in which firms agree to compete with each other on an equal basis. d. any oligopolistic industry with fewer than 4 firms.
Correct Marks for this submission: 1/1.
2
A firm uses ________ for goods which the consumer takes pride in owning.
Marks: 1
Choose one answer.
a. prestige pricing b. penetration pricing c. predatory pricing d. price skimming
Correct Marks for this submission: 1/1.
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ECON510-1900-SP11: 9th Assignment
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When a firm sets a price relatively low in order to increase the market share, it is referred as Marks: 1
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a. penetration pricing. b. predatory pricing. c. price skimming. d. limit pricing.
Correct Marks for this submission: 1/1.
4
The result for the seller of being able to practice price discrimination will be
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a. lower quantity sold. b. cost minimization. c. higher profits. d. lower demand elasticity.
Correct Marks for this submission: 1/1.
5
In order that price discrimination can exist
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a. different demand price elasticities must exist in different markets. b. markets must be interdependent. c. markets must be capable of being separated. d. demand price elasticities must be identical in all markets. e. Both A and C
Incorrect Marks for this submission: 0/1.
6
By far, the most frequently encountered price discrimination is the
Marks: 1
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a. fourth-degree price discrimination. b. third-degree price discrimination.
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ECON510-1900-SP11: 9th Assignment
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c. second-degree price discrimination. d. first-degree price discrimination. Correct Marks for this submission: 1/1.
If banks face a problem in loan markets when bad credit risks are the ones most likely to seek bank loans, it is described as Marks: 1
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Choose one answer.
a. fraud. b. moral hazard. c. adverse selection. d. moral suasion.
Correct Marks for this submission: 1/1.
8
Dominant price leadership exists when
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a. the dominant firm establishes the price at the quantity where its MR = MC, and permits all other firms to sell all they want to sell at that price. b. the dominant firm charges the lowest price in the industry. c. one firm drives the others out of the market. d. the dominant firm decides how much each of its competitors can sell.
Correct Marks for this submission: 1/1.
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A successful and stable cartel can be established if there are
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a. a few firms producing a storable product. b. many firms producing a perishable product. c. many firms producing a storable product. d. a few firms producing a perishable product.
Correct Marks for this submission: 1/1.
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Other things remaining the same, an increase in the price of butter can be expected to Marks: 1
10
Choose one answer.
a. decrease margarine sales. b. increase margarine sales. c. increase butter sales. d. None of the above
Correct Marks for this submission: 1/1.
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Gasoline and heating oil are examples of products which are
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a. joint products that are complements. b. joint products in fixed proportions. c. unrelated to each other. d. joint products in variable proportions.
Correct Marks for this submission: 1/1.
12
Barometric price leadership can occur when oligopolistic firms
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a. try to enforce cartel agreements. b. want to avoid price competition and violating antitrust laws. c. compete on the basis of differentiated products. d. All of the above
Correct Marks for this submission: 1/1.
All of the following are conditions which are favorable to the formation of cartels except Marks: 1
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ECON510-1900-SP11: 9th Assignment
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a. easy entry into the industry. b. geographic proximity of firms. c. the existence of a small number of firms. d. homogeneity of the product.
Correct Marks for this submission: 1/1.
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The following are possible examples of price discrimination except
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a. prices in export markets are lower than for identical products in the domestic market. b. subscription prices for a professional journal are higher when bought by a library than when bought by an individual. c. a product sells at a higher price at location A than at location B, because transportation costs are higher from the factory to A. d. senior citizens pay lower fares on public transportation than younger people at the same time.
Correct Marks for this submission: 1/1.
If the demand elasticity for a product is -2, and a profit-maximizing firm sells the product for $10, its marginal cost must be Marks: 1
15
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a. $8. b. $5. c. $10. d. $15.
Correct Marks for this submission: 1/1.
Assuming mustard and burgers are complements, a decline in the price of burgers will Marks: 1
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Choose one answer.
a. decrease in the quantity demanded of burgers. b. decrease the demand for mustard.
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ECON510-1900-SP11: 9th Assignment
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c. increase the demand for mustard. d. decrease the demand for burgers. Correct Marks for this submission: 1/1.
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Prices under an ideal cartel situation will be equal to
Marks: 1
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a. monopoly prices. b. marginal cost. c. prices under monopolistic competition. d. competitive prices.
Correct Marks for this submission: 1/1.
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Dominant price leadership exists when
Marks: 1
Choose one answer.
a. the dominant firm establishes the price at the quantity where its MR = MC, and permits all other firms to sell all they want to sell at that price. b. the dominant firm charges the lowest price in the industry. c. one firm drives the others out of the market. d. the dominant firm decides how much each of its competitors can sell.
Correct Marks for this submission: 1/1.
Other things remaining the same, an increase in the price of butter can be expected to Marks: 1
19
Choose one answer.
a. decrease margarine sales. b. increase margarine sales. c. increase butter sales. d. None of the above
Correct Marks for this submission: 1/1.
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ECON510-1900-SP11: 9th Assignment
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When state universities charge higher tuition fees to out-of-state students than to local students, the universities are practicing Marks: 1
20
Choose one answer.
a. third-degree discrimination. b. fourth-degree discrimination. c. first-degree discrimination. d. second-degree discrimination.
Correct Marks for this submission: 1/1.
21
In the Baumol model, a change in fixed costs will
Marks: 1
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a. have no effect on total quantity sold. b. have an effect on total quantity sold. c. decrease total quantity sold. d. increase total quantity sold.
Incorrect Marks for this submission: 0/1.
22
If a product which costs $8 is sold at $10, the profit margin is
Marks: 1
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a. 20%. b. $2. c. 25%. d. None of the above
Incorrect Marks for this submission: 0/1.
23
Transfer pricing is a method used to
Marks: 1
a. minimize a multinational firm's tax liabilities.
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ECON510-1900-SP11: 9th Assignment
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b. determine whether a firm should make or buy a component product. c. determine the correct value of a product as it moves from one stage of production to another. d. All of the above
Correct Marks for this submission: 1/1.
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The Prisoner's Dilemma is an example of
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a. adverse selection. b. a non-zero sum, non-cooperative game with a dominant strategy. c. market signaling. d. a zero-sum game.
Correct Marks for this submission: 1/1.
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Moral hazard is the
Marks: 1
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a. outcome of a Prisoner's Dilemma. b. risk associated with a Dutch auction. c. result of market signaling. d. risk that one party to a contract may alter its post-contract behavior to the detriment of another party.
Correct Marks for this submission: 1/1.
26 Marks: 5
Industry demand is given by: Qd = 1000 - P All firms in the industry have identical and constant marginal and average costs of $50/unit. a. If the industry is perfectly competitive, what will industry output be? What will be the
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ECON510-1900-SP11: 9th Assignment
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equilibrium price? What profit will each firm earn? b. Now suppose that there are five firms in the industry, and that they collude to set price. What price will they set? What will be the output of each firm? What will be the profit of each firm? Answer:
ANS:- A If Perfect Competition then NO PROFIT. Profit = 0 Eqlibiriam Price = 50 Q= 1,000 - 50 Q= 950 Ans:- B Q = 1,000 - P P = 1,000 - Q --------------------TR = (1,000 - Q ) Q = 1,000 Q - (Q)² MR = 1,000 - 2 Q MR = 50 -----------------------------1,000 - 2 Q = 50 2 Q = 950 Q = 950 / 2 Q = 475 ---------------------------------P = 1,000 - 475 P = 525 --------------------------------------Q=Q/5 Q = 475 / 5 Q = 95 -------------------------------------------
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ECON510-1900-SP11
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