Suppose firm A is currently the only firm in a market and thus currently behaving as a monopolist. The market demand is given as: Q= 100 -P, where Q is the market quantity and Pis the market price. Now, firm Bis contemplating entering the market. Further, suppose A and B have total costs that are zero at all output levels. Note: A's and B's quantities produced are denoted Q, and Qu» respectively. (1) In the pre-entry period (i.e., when A is a monopolist), A would most desire to price the product at: A. S100 В. $75 C. D. S50 $25 [2] In the pre-entry period (i.e., when A is a monopolist), A's maximum profit exceds $2000. A. True В. False (3] Assuming the Sylos Postulate holds, this is a case of blockaded entry. A. True В. False (4) Assuming the Sylos Postulate holds, ifA produces its pre-entry profit-maximizing quantity, then B's
Suppose firm A is currently the only firm in a market and thus currently behaving as a monopolist. The market demand is given as: Q= 100 -P, where Q is the market quantity and Pis the market price. Now, firm Bis contemplating entering the market. Further, suppose A and B have total costs that are zero at all output levels. Note: A's and B's quantities produced are denoted Q, and Qu» respectively. (1) In the pre-entry period (i.e., when A is a monopolist), A would most desire to price the product at: A. S100 В. $75 C. D. S50 $25 [2] In the pre-entry period (i.e., when A is a monopolist), A's maximum profit exceds $2000. A. True В. False (3] Assuming the Sylos Postulate holds, this is a case of blockaded entry. A. True В. False (4) Assuming the Sylos Postulate holds, ifA produces its pre-entry profit-maximizing quantity, then B's
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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