1.The government of a small country is trying to encourage competition in the market for product X and offers a significant per-unit subsidy. However, it fails to incentivize an increase in competition. Which of the following could explain this scenario? (2 points)

The price elasticity of demand is very high.

A per-unit subsidy does not change output decisions.

No firm in the industry has market power.

The firms in the market are selling indistinguishable units of product X.

There are insurmountable barriers to entry into the market.

2.Deniques Limited is the only provider of sophisticated medical equipment in Farland. It perceives the demand curve it faces to be the same as the market demand curve. If its demand is represented by P = 100 ? 2Q, which of the following is correct about Deniques Limited? (2 points)

An increase in the price decreases economic losses.

A decrease in price decreases the quantity sold.

A decrease in price increases the quantity sold.

Higher levels of output bring in increasingly lower total revenue if demand is elastic.

Maintaining the current price decreases the quantity sold over time.

3.Which of the following characteristics are unique to the monopoly market structure? (2 points)

Market power

Persistent economic profits

Marginal revenue beneath demand

Economies of scale

An insurmountable barrier to entry

4.Use the graph to answer the question that follows. (2 points)

Price MC H AC M P N AR P, L G MR O Quantity Q1 Q2 (units)$22 MC $20 $18 $16 $14 $12 Price $10 $8 $6 $4 Demand $2 - MR 10 20 30 40 50 60 70 80 90 100 QuantityPrice MC ATC DI MR2 MR1 D2 Quantity (units)Sarah Full time Part time Patricia Full time $60, $60 $50, $80 Part time $80, $50 $55, $55Company B Retail outlets No retail outlets Company A Retail outlets $25, $25 $30, $15 No retail outlets $35, $35 $34, $20 Martha Discount No Discount Megan Discount $50, $75 $75, $60 No Discount $35, $90 $70, $85