(Figure: Market for Two-Firm Industry III) According to the figure, which of the followingstatements is TRUE?Price (S) 10MC8.ATC6.4DMR6.810Quantity (1,000s)I. If Firm B expects Firm A to charge $3, Firm B should charge $5.50.II. If Firm A expects Firm B to charge $6, Firm A should charge $7.II. The Nash equilibrium is for each firm to charge the same price.O IIO I and II1, II, and III (Figure: Market for Two-Firm Industry III) According to the figure, which of the followingstatements is TRUE?Price (S) 10MCАТС6.42MR6.8.10Quantlty (1,000s)1. If Firm B expects Firm A to charge $3, Firm B should charge $5.50.II. If Firm A expects Firm B to charge $6, Firm A should charge $7.III. The Nash equilibrium is for each firm to charge the same price.O l and IIOI, II, and III

Answer - Need to find- Which statement is "True" Given in the question-

(Figure: Market for Two-Firm Industry II) According to the figure, which of the following statements is TRUE? Price (S) 10 MC 8. ATC 4. MR 6. 10 Quantity (1,000s) I. If Firm B expects Firm A to charge $3, Firm B should charge $5.50. II. If Firm A expects Firm B to charge $6, Firm A should charge $7. II. The Nash equilibrium is for each firm to charge the same price. O I and II O I, II, and IIl 2)

(Figure: Market for Two-Firm Industry II) According to the figure, which of the following statements is TRUE? Price (S) 10 MC 8. ATC 4. MR 6. 10 Quantity (1,000s) I. If Firm B expects Firm A to charge $3, Firm B should charge $5.50. II. If Firm A expects Firm B to charge $6, Firm A should charge $7. II. The Nash equilibrium is for each firm to charge the same price. O I and II O I, II, and IIl 2)

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter23: Managing Vertical Relationships

Section: Chapter Questions

Problem 1MC

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39 Output Total Total (Q) Price Revenue Cost 1 $20.00 $2.50 i of 2 $15.00 $5.00 $10.00 $7.50 4 $5.00 $10.00 The table above shows demand and cost information for a firm that has market power and can set its price. If the firm can only charge one price to all its customers (it cannot price discriminate), it's profit maximizing Output (Q) is: Select one: a. 1 b. 3 C. 4 d. 2
$150 $145 $140 MC $135 $130 $125 $120 $115 ATC $110 $105 $100 $95 $90 $85 $80 AVC $75 $70 $65 $60 $55 $50 $45 $40 $35 $30 $25 0 1 2 3 5 6 Quantity Produced 7 8 9 10 11 The graph above shows the cost functions for a perfectly competitive profit maximizing firm. If the market price of the product is $70 per unit, the firm will produce units, will cover make an economic profit of dollars. dollars of its fixed cost, and will
$30.00 $25.00 i of $20.00 $15.00 LRATC = LRMC $10.00 $5.00 Demand = P MR $0.00 50 100 150 200 250 300 Output (Q) The diagram above shows demand and long-run cost curves for a firm that has market power and can set its own price. If the firm must charge the same price to each buyer (it cannot price discriminate), how much total profit will the firm make at its profit maximizing output level? Select one: a. $1,000 b. $2,000 с. $500 d. $2,500 21
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40 Output Total Total (Q) Price Revenue Cost 1 $20.00 $2.50 i of 2 $15.00 $5.00 $10.00 $7.50 $5.00 $10.00 The table above shows demand and cost information for a firm that has market power and can set its price. If the firm is able to Perfectly Price Discriminate, it's profit maximizing Output (Q) is: Select one: а. 3 b. 4 C. d. 1