31 May 13.The following table provides information on the price, quantity, and
Question
13.The following table provides information on the price, quantity, and average cost for a
monopoly. At what price will the firm maximize its profit?
Price Output ATC
$5 0 ??
$4 4 $1.00
$3 8 $0.75
$2 12 $0.75
$1 16 $0.81
$0 20 $0.90
a.$1
b.$2
c.$3
d.$4
14George and Jerry are competitors in a local market. Each is trying to decide if it is better to advertise on TV, on radio, or not at all. If they both advertise on TV, each will earn a profit of $3,000. If they both advertise on radio, each will earn a profit of $5,000. If neither advertises at all, each will earn a profit of $10,000. If one advertises on TV and the other advertises on radio, then the one advertising on TV will earn $4,000 and the other will earn $2,000. If one advertises on TV and the other does not advertise, then the one advertising on TV will earn $8,000 and the other will earn $5,000. If one advertises on radio and the other does not advertise, then the one advertising on radio will earn $9,000 and the other will earn $6,000. If both follow their dominant strategy, then George will
a.advertise on TV and earn $3,000.
b.advertise on radio and earn $5,000.
c.advertise on TV and earn $8,000.
d.not advertise and earn $10,000.
Table 1.The information in the table below shows the total demand for premium?channel
digital cable TV subscriptions in a small urban market. Assume that each digital cable TV
operator pays a fixed cost of $200,000 (per year) to provide premium digital channels in the
market area and that the marginal cost of providing the premium channel service to a
household is zero.
Quantity Price (per year)
0 $180
3,000 $150
6,000 $120
9,000 $ 90
12,000 $ 60
15,000 $ 30
18,000 $ 0
15.Refer to Table 1. Assume there are two profit?maximizing digital cable TV companies operating in this market. Further assume that they are not able to collude on the price and quantity of premium digital channel subscriptions to sell. What price will premium digital channel cable TV subscriptions be sold at when this market reaches a Nash equilibrium?
a.$30
b.$60
c.$90
d.$120
16.Refer to Table 1. Assume there are two profit?maximizing digital cable TV companies
operating in this market. Further assume that they are not able to collude on the price and
quantity of premium digital channel subscriptions to sell. How many premium digital channel cable TV subscriptions will be sold altogether when this market reaches a Nash equilibrium?
a.6,000
b.9,000
c.12,000
d.15,000
17.Refer to Table 1. Assume that there are two profit?maximizing digital cable TV companies operating in this market. Further assume that they are not able to collude on the price and quantity of premium digital channel subscriptions to sell. How much profit will each firm earn when this market reaches a Nash equilibrium?
a.$25,000
b.$90,000
c.$160,000
d.$215,000
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