1. All the answers below are necessary conditions for a firm to be able to use segment pricing, except:

1. The firm faces a downward sloping demand curve
2. The firm can distinguish between different groups of customers with different price sensitivities
3. The firm's customers all have the same demand curve
4. The firm has the ability to prevent any form of resell and arbitrage
5. The firm is a price searcher

2. Consider two firms that produce identical products in a situation of duopoly. The two firms have the same marginal cost. Which of the following statements is true:

1. Under Cournot competition, the equilibrium price is lower than the equilibrium price under Bertrand competition
2. Under Bertrand competition, the equilibrium price will be at the same level as the equilibrium price under perfect competition
3. Under Cournot competition, the equilibrium price will be at the same level as the equilibrium price under perfect competition
4. Under Cournot competition, the equilibrium price will be at the same level as the price under a monopoly
5. The two firms will end up producing different levels of output

3. Which statement about externalities iswrong?

1. A firm naturally takes into account negative externalities that result from their production
2. Markets are typically not efficient in dealing with externalities
3. Externalities can be positive or negative
4. Negative externalities imply that the social cost is higher than the internal (or private) cost
5. Interventions such as carbon taxes can help correct externalities

4. A company selling wooden tables utilizes low-skilled and high-skilled craftsmen. Low-skilled craftsmen are paid 2,000 dollars per month, and their marginal product (at the current point of production) is estimated at 120 tables per month. High-skilled craftsmen are paid 3,500 dollars per month, and their marginal product (at the current point of production) is estimated at 175 tables per month. What should the company do to optimize its production process (i.e, produce the same quantity at a lower cost)?

1. The company should employ fewer high-skilled craftsmen and more low-skilled craftsmen
2. Nothing, the company is at the optimal combination of high-skilled and low-skilled craftsmen
3. The company should increase the number of high-skilled and low-skilled craftsmen
4. The company should employ more high-skilled craftsmen and fewer low-skilled craftsmen
5. The company should reduce the number of high-skilled and low-skilled craftsmen