LL MICRO + SAPLING PLUS 1 TERM
4th Edition
ISBN: 9781319319052
Author: KRUGMAN
Publisher: MAC LTD
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Question
Chapter 14, Problem 1QFT
To determine
Collusion of Virgin Atlantic and British Airways in response to increased oil prices.
Concept Introduction:
Collusion is an agreement between two or more parties in order to deceive rival companies and take advantage of the market.
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Students have asked these similar questions
The diagram shows a pharmaceutical firm's demand
curve and marginal cost curve for a new heart medication
for which the firm holds a 20-year patent on its
production.
At its profit-maximizing level of output, it will generate a
deadweight loss to society represented by what?
A. There is no deadweight loss generated.
B. Area H+I+J+K
OC. Area H+I
D. Area D + E
◇ E. It is not possible to determine with the
information provided.
(...)
0
Price
0
m
H
B GI
A
MR
MC
D
Outp
Consider the figure on the right. A single-price monopolist
will produce
○ A. 135 units and charge a price equal to $32.
B. 135 units and generate a deadweight loss.
OC. 189 units and charge a price equal to the
perfectly competitive price.
○ D. 189 units and charge a price equal to $45.
()
Dollars per Unit
$45
$32
MR
D
135 189
Output
MC
NG
Suppose a drug company cannot prevent resale between rich and poor countries and increases output from 3
million (serving only the rich country with a price of $80 per treatment) to 9 million (serving both the rich and the poor
countries with a price of $30 per treatment). Marginal cost is constant and equal to $10 per treatment in
both countries.
The marginal revenue per treatment of increasing output from 3 million to 9 million is equal to
○ A. $20 per treatment, which is greater than the marginal cost of $10 per treatment and thus implies that profits
will rise.
○ B. $20 per treatment, which is greater than zero and thus implies that profits will rise.
○ C. $30 per treatment, which is greater than the marginal cost of $10 per treatment and thus implies that profits
will rise.
○ D. $5 per treatment, which is less than the marginal cost of $10 per treatment and thus implies that profits will
fall.
○ E. $30 per treatment, which is less than the marginal revenue of $80 per treatment…
Chapter 14 Solutions
LL MICRO + SAPLING PLUS 1 TERM
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