Question

A. When two goods must be bought in a package (with a fixed ratio), they are

1. tied
2. separated
3. aggregated
4. bundled

B. Assuming the same cost structure, a competitive market produces ________ output at ________ prices than a monopoly market.

1. less; lower
2. more; lower
3. more; higher
4. less; higher

C. A market is considered perfectly competitive if

I. there is a lot of product differentiation amongst sellers.

II. there are many sellers, each small relative to the total market.

III. the product sold is similar across sellers.

IV. there are only a few buyers.

1. I and II only
2. I, II, and III only
3. II, III, and IV only
4. II and III only

D. If most cartel members keep their agreement to cut back production:

1. the losses associated with cheating are internalized by the cheater
2. it's profitable in the short run for another member to increase production
3. cheating by another member won't be detected
4. it's not profitable in the short run for another member to increase production

E. A perfectly prices discriminating monopolist produces until:

1. P = MC
2. MR = AC
3. P = MR
4. MR = MC

F. A dominant strategy is a strategy that a player should take only if the other player cheats. True/False.

G. A cartel can remain powerful even when all the members engage in secret price cuts. True/False.

H. Competitive firms want to enter industries in which

1. P < MC
2. P = MC
3. P < AC
4. P > AC

I. If a homer operates a small bakery and sells donuts for $4/dozen, he should:

1. sell an additional dozen donuts as long as the total cost of producing an additional dozen donuts is less than $4.
2. sell an additional dozen donuts as long as the marginal cost of producing an additional dozen donuts is less than $4.
3. only sell more donuts if his total revenue is greater than his total cost.
4. sell an additional dozen donuts so long as the fixed cost of production is greater than $4.