Question 1

Two cigarette manufacturers (Firm A and Firm B) are faced with lawsuits from provinces to recover the health-care related expenses associated with cigarette smoking. Both cigarette firms have evidence that indicates that cigarette smoke causes lung cancer (and other related illnesses). Provincial prosecutors do not have access to the same data used by cigarette manufacturers and thus will have difficulty recovering full costs without the help of at least one cigarette firm study. Each firm has been presented with an opportunity to lower their liability in the suit if they cooperate with attorneys representing the provinces. Firm A Concede that Argue that there is no cigarette smoke evidence that smoke causes causes lung cancer Cancer Concede that Firm B cigarette smoke Firm A loss = -$20 Firm A loss = -$50 causes lung cancer Firm B loss = -$15 Firm B loss = -$5 Argue that there is no evidence that Firm A loss = -$5 Firm A loss = -$10 smoke causes cancer Firm B loss = -$50 Firm B loss = -$10 Refer to Table 17-3. If both firms follow a dominant strategy, what will Firm A's profits (losses) be? a) -$50 Ob) -$20 O c) -$10 O d) - $5Figure 21-8 Guantly of Manhmallows 18 17 15 141 13 12 10 16 18 20 Quantity of Chooplace Chips Refer to Figure 21-8. Assume that the consumer depicted has an income of $100 and the price of a bag of marshmallows is $5. Which bundle of marshmallows and chocolate chips will the optimizing consumer choose to purchase? O a) bundle A Ob) bundle B O c) bundle C O d) bundle DQuestion 7 (1 point) Table 16-1 A monopolistically competitive firm faces the following demand curve for its product: Price (S) 10 T 2 Quantity 2 4 6 10 12 14 16 18 20 Refer to Table 16-1. The firm has total fixed costs of $20 and a constant marginal cost of $3 per unit. What will the firm do? O a) It will produce 8 units; firms will enter the market in the long run. O b) It will produce 10 units; firms will enter the market in the long run. O c) It will produce 10 units; firms will exit the market in the long run. O d) It will produce 12 units; firms will enter the market in the long run.The figure below reflects the cost and revenue structure for a monopoly firm. Cost and | RowUNS) P Quantity Refer to Figure 15-3. What is a profit-maximizing monopoly's total revenue? O a) P2 x QA O b) ( P3 - Po ) x Q2 Oc) P , x Q2 O d) ( P) - PQ) x 24