1) There are two firms competing la Bertrand, and Firm A has a…

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Question Answered step-by-step 1) There are two firms competing la Bertrand, and Firm A has a… 1) There are two firms competing à la Bertrand, and Firm A has a marginal cost strictly greater than that of Firm B. What will happen in this case? A) At the Nash equilibrium, both firms should make positive profits. B) Both firms will keep undercutting each other until neither firm makes positive profit in equilibrium. C) Firm A will keep undercutting Firm B until, in equilibrium, Firm A makes positive profit and Firm B makes no profit. D) Firm B will keep undercutting Firm A until, in equilibrium, Firm B makes positive profit and Firm A makes no profit. 2) Suppose a monopolistically competitive industry has five firms; the two largest each have a 30 percent share of the market and the remaining three firms each have a 20 percent share of the market. If the two largest firms merge, the Herfindahl-Hirschman Index increases by ________ points to ________. A) 0; 100 B) 0; 3,000 C) 1,800; 4,800 D) none of the above 3) The following figure depicts the demand of Ann, the demand of Bob, and the market demand for Good X. Assume that all demands are linear. Refer to the figure above. If Good X is a public good, what is the total quantity demanded on the market if the market price is $4? A) 8 B) 14 C) 12 D) 10 4) You walk into a used car lot to buy your first car. However, you are not sure of the quality of the cars in the lot and expect one-third of them to be of poor quality. You are eager to pay $10,000 for a good-quality car but $0 for a poor-quality car. Suppose you decide to buy a Toyota Corolla that the car dealer values at $8,500. What is the most that you would be willing to pay for the car? A) $8,500B) $6,666C) $10,000 D) $5,000 5) Consider a firm that produces and sells a good for the price of $2 in a perfectly competitive market. The following table shows the relationship between the number of workers and the output of this firm. Suppose the labor market from which this firm hires its employees is competitive.  If the wage rate in this market is equal to $18, this firm will hire ________ workers. A) 2 B) 3 C) 4 D) 5  Business Economics Microeconomics CS 73-102 Share QuestionEmailCopy link Comments (0)