Microeconomics

PART 1

STATE IF THIS CONSIDERATIONS ARE TRUE OR FALSE AND EXPLAIN WHY

Q1. Consider a monopolistic market with a linear demand function. Suppose that the monopolist faces a linear cost function with no fixed costs of the type: jQuery2240836514338090637_1598973657701(??)=??? , with ??>??. The value of the elasticity evaluated at the equilibrium combination of price and quantity is, in absolute terms, smaller than 1.

Q2. An import tariff increases the producer's surplus but reduces the overall surplus.

Q3. Consider a perfectly competitive market with identical firms. The cost function faced by the firms generates marginal and average cost functions that present the usual (convex) U-shape. In the short run equilibrium level of production, the marginal costs of the generic firm are above the average costs. Then, in the long run, the number of firms will increase.

Q4. Consider a simultaneous game with two players, each disposing of two strategies: H and L. For both players, L is a (strictly) dominated strategy. Then it is possible that the game admits a Nash equilibrium in which both players choose L.