Please help me with the attached homework. Thank You Document Preview: Question 1A monopoly is producing a level of output at which price is $80, marginal revenue is $40, average total cost is $100,...

Question 1
A monopoly is producing a level of output at which price is $80, marginal revenue is $40, average total cost is $100,
marginal cost is $40, and average fixed cost is $10. In order to maximize profit, the firm should
Question options:

1) produce more.

2)
keep output the
same.

3) produce less.

4) shut down.
Question 2
Two men’s clothing stores that compete for most of the market in a small town in Ohio must choose their
advertising levels simultaneously. The following payoff table facing the two firms, A
uckle & Son and Mr. B’s,
shows the weekly profit outcomes for the various advertising decision combinations. Use this payoff table to
answer the question
Mr. B’s advertising level
High Low
A
uckle &
Son adv level
High
Low

A$4,000, $4,000
C$5,000, $3,000

B$3,000, $5,000
D$3,500, $3,500
Mr. B
Question options:

1) has a dominant strategy: choose a high level of advertising

2) has a dominant strategy: choose a low level of advertising.

3)
has a dominated strategy: choose a low level of
advertising.

4) has no dominated strategy

5) both a and c
Question 3
The managers of Alpha and Beta must make repeated advertising decisions simultaneously at the beginning of every
month. They choose either low or high levels of advertising expenditure. They both employ a discount rate of 2.5
percent per month. Use the payoff table shown below to answer the next question..
Beta’s advertising
High Low
Alpha’s High
A
$7,000, $3,500
B
$2,000, $6,500
advertising Low
C
$8,000, $1,000
D
$4,000, $2,000
Payoffs in dollars of monthly profits.
If both firms cooperate, Alpha will choose a high level of advertising and Beta will choose a high level of
advertising.
Question options:

1)
high;
high

2) high; low

3) low; high

4) low; low
Question 4
A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs. It faces an inverse demand
function given by P = 50 - Q. Which of the following is the marginal revenue function for the firm?
Question options:

1)
MR = 60 -
2Q.

2) MR = 50 - Q.

3)
MR = 100 -
Q.

4)
MR = 50 -
2Q.
Question 5
The next question refers to the following table showing a monopolist’s demand schedule:
Price Quantity
$50 300
40 600
20 800
10 1,000
If price falls from $20 to $10, then
Question options:

1)
MR = $10, and demand is
inelastic.

2) MR = $10, and demand is elastic.

3) MR = $30, and demand is elastic.

4)
MR = $30, and demand is
inelastic.

5) none of the above
Question 6
A monopolist
Question options:

1) can raise its price without losing any sales because it is the only supplier in the market.

2) can earn a greater than normal rate of return in the long run.

3) always charges a price that is higher than marginal revenue.

4) both a and b

5)
oth b and c
Question 7
A monopolist is producing a level of output at which price is $65, marginal revenue is $35, average total cost is $35,
and marginal cost is $50. In order to maximize profit, the firm should
Question options:

1)
keep output the
same.

2) produce less.

3) produce more.

4) decrease price.

5) both c and d
Question 8
In game theory, a dominant strategy is
Question options:

1) a strategy used by a large firm to compete against smaller firms.

2) a strategy followed by the price leader.

3) a strategy involving a high risk but also a high return.

4)
a strategy that leads to the best outcome no matter what a rival
does.

5) none of the above...