1. You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost function is C = 40 + 5Q². Your firm's maximum profits are:

Select one:

a.125.

b.250.

c.100.

d.85.

2. A monopoly has two production plants with cost functions C₁= 50 + 0.1Q₁² and C₂ = 30 + 0.05Q₂². The demand it faces is Q = 500 - 10P. What is the condition for profit maximization?

Select one:

a.

MC₁(Q₁) = MC₂(Q₂) = P(Q₁ + Q₂).

b.

MC₁(Q₁) = MC₂(Q₂) = MR(Q₁ + Q₂).

c.

MC₁(Q₁ + Q₂) = MC₂(Q₁ + Q₂) = P (Q₁ + Q₂).

d.

MC₁(Q₁ + Q₂) = MC₂(Q₁ + Q₂) = MR (Q₁ + Q₂).

3. Which of the following is NOT a basic feature of a monopolistically competitive industry?

Select one:

a.There are many buyers and sellers in the industry.

b.Each firm in the industry produces a differentiated product.

c.There is free entry and exit into the industry.

d.Each firm owns a patent on its product.