(1) If a profit maximizing monopolist operates where P=$1 and the e = -4/3, what is the value of its MC when it is maximizing profits?

1. 25
2. 50
3. 1
4. 75

(2) A Cournot Oligopoly (duopoly) exists where the market demand function facing each firms is

P = 4 - (Q1 + Q2) , where Q = (Q1 + Q2) and the MC facing each firm is zero.

If each firm takes the output of the other firm as given, what is the market quantity (Q) and market price (P) that will prevail?

1. 4/3, 4/3
2. 1, 1
3. 1, 4/3
4. 8/3, 4/3