1. In a market with a monopoly that faces direct demand Q(P) = a - bP, and cost functionc(Q) = dQ - eQ^2 then the firm's marginal revenue function is

a. a/b - 2/bQ

b. a - 2/bQ

c. a - 2bQ

d. none of the above

2. Charging a higher price to ship corn than to ship soybean by covered hopper train car to the same destination is an example of

1. Perfect price discrimination
2. Group price discrimination
3. Tiered price discrimination
4. Actual cost differences

3. Let demand be PQ= 6 -1/2Q. What is the price elasticity of demand at Q=4?

a. = - 1/4

b. = - 1/2

c. = -4

d. = -2

4. Suppose we have 3 types of households each with private demand for a public good (like flood protection) of P₁(Q)=5, P₂(Q)=10-Q, and

P₃(Q)=20-2Q. What is the social demand curve for the range Q<10?

a. P_s (Q) = 30-3Q

b. P_s (Q) = 35-3Q

c. P_s (Q) = 20-2Q

d. P_s (Q) = 150-6Q

5. In a market with a monopolist, which of the following pricing strategies maximizes total social welfare (no deadweight loss)?

a. Perfect price discrimination

b. Block pricing

c. Group price discrimination

d. None of the above; all monopolist pricing strategies ends as deadweight loss

6. Suppose marginal revenue is positive (MR>0). What does that tell us about the demand elasticity at that point?

a. > -1

b. < -1

c. = -1

d. The demand elasticity is unrelated to the marginal revenue curve.