ANSWER THE FOLLOWING
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A market served by only one firm is called a(n): 1) A) oligopoly. (B) monopoly. C perfectly competitive market. D) Any of the above could be correct. 2) A firm that has market power has the ability: 2) At A) to affect the price of its own product BJ to drive its competition out of the market. () to command consumer to buy any quantity from them. Dj to conduct illegal activities without fear of prosecution. 3) Which of the following is NOT a characteristic of a monopoly? (A) A monopolist is a price-taker. B) There exist barriers to entry. () There is only one seller. D) A monopolist's sales revenue is constrained by the market demand. () When economists say a market has "barriers to entry" they refer to: (A) factors that prevent other firms from challenging a firm with market power. Bj economic profits that are positive, but too high to encourage entry. Ca policy that some countries establish to reduce imports from other countries. Dj monopolists being prohibited from selling their products to certain customers, 5) Which of the following is NOT an artificial barrier to entry? 5 ) B A) government franchise B) large economies of scale C) government licensing Dj a patent 6) A monopoly may arise due to: 6) D A) a patent. B) large economics of scale. () net work externalities. Dj all of the above 7) Facebook is a social networking Web site that is used by a growing number of individuals. Because of its popularity, it is now more difficult for new networking websites to enter and compete with Facebook. Facebook enjoys as a barrier for others to enter the market. A) a network externality B) price discrimination C) economies of scale Dj a negative externality 8) The demand curve that a monopolist faces is: D A) generally flatter than the demand curve that faces a perfectly competitive firm. Bj the same as the demand curve that faces a perfectly competitive firm. C) not affected by changes in the prices of other goods, Di the market demand curve.1. (BASED ON problem 10.4, page 262 in the text, and problem 11.2, page 281) Consider the town of Tuftsville, where everyone lives along Market street, which is 1 miles long. There are 1000 people living evenly spread along Market street, and every day they each buy an ice cream cone from one of two stores located at either end of the street (Soulman's at one end [x=0], Norman's at the other [x=1]). Customers value their travel time at $2.50 per mile of travel, and buy from the cheapest store for them, including the price and the travel cost. Norman has invested in a more efficient freezer, so his MC per cone is 1, while Soulman's MC is 2. Customers each have a maximum willingness to pay for their Daily cone of $10. a) If Norman changes p_n and Soulman charges p_s, which is the location, x, of the customer who is indifferent between going to the two shops? b) If Norman charges $2 and Soulman charges $3 per cone, how many will they each sell in a day? C) What are the equilibrium prices and quantities for the two shops? If each has daily fixed costs (in addition to marginal costs) of $100, what are each firm's profits? d) Qualitatively (just explain - you don't have to do the math), if the situation were sequential, so that Soulman announces his price first, how would you expect the firms' respective prices, quantities, and profits to change? A3. Shirley maximizes utility by setting MRS=1+r as she is planning over a two-year period. She earns $50,000 this year and will earn $70,000 next year. The marginal rate of substitution (MRS) of MRS=2C1\\Co. The interest rate is 3%. 3a. Write down the two-period budget constraint in terms of Co and C1 (the two-period budget constraint must only have numbers, Co and C1). 3b. Calculate how much is consumed in the first year (Co). 3c. Calculate savings and explain your answer. Show how to use savings and year 2 earnings to determine his year two consumption (C1).4. Development of a new deluxe version of a particular software product is being considered by Ravi Behara's software house. The activities necessary for the completion of this project are listed in the following table. Normal Crash Activity Time Normal Crash Immediate Time (Weeks) (Weeks) Cost (() Cost (() Predecessor A 4 3 2,000 2,600 2 2,200 2,800 3 500 500 - 8 2,300 2,600 A WA 6 900 1,200 B 3,000 4.200 C NN 4 1,400 2,000 D.E a) Construct the project network for this project (activity on node). b) Find Earliest Start (ES), Latest Start (LS), Earliest Finish (EF), Latest Finish (LF) and Slack for each activity. c) Determine the Critical path & Project completion time. d) Construct the Gantt chart based on ES &LS. e) What is the total cost required for completing this project on normal time? f) If you wish to reduce the time required completing this project by 1 week, which activity should be crashed, and how much will this increase the total cost
