Question 23

Anna, Bill, and Charles are competitors in a local market, and each is trying to decide if it is worthwhile to advertise. If all of them advertise, each will earn a profit of $5000. If none of them advertise, each will earn a profit of $8000. If only one of them advertises, the one who advertises will earn a profit of $10,000 and the other two will each earn $2000. If two of them advertise, those two will each earn a profit of $6000 and the other one will earn $1000. If all three follow their dominant strategy, what will Anna do and how much will she earn?

A	advertise and earn $5000
B	advertise and earn $6000
C	not advertise and earn $8000
D	advertise and earn $10,000

Question 24

A monopolist faces market demand given by P = 220 - 5Q. For this market, MR = 200 - 10Q and MC = 10Q. What price will the monopolist charge in order to maximize profits?

A	$46
B	$110
C	$147
D	$170

Question 25

A monopolist faces market demand given by P = 80 - Q. For this market, MR = 80 - 2Q and MC = 2Q. What price will the monopolist charge in order to maximize profits?

A	$20
B	$30
C	$50
D	$60

Question 26

Alma, Marcus, and Carlos are competitors in a local market, and each is trying to decide if it is worthwhile to advertise. If all of them advertise, each will earn a profit of $2000. If none of them advertise, each will earn a profit of $8000. If only one of them advertises, the one who advertises will earn a profit of $6000 and the other two will each earn $5000. If two of them advertise, those two will each earn a profit of $4000 and the other one will earn $3000. If all three follow their dominant strategy, what will Alma do and how much will she earn?

A	advertise and earn $2000
B	advertise and earn $4000
C	not advertise and earn $5000
D	not advertise and earn $8000

Question 27

George and Charlotte are competitors in a local market. Each is trying to decide if it is better to advertise on TV, on radio, or not at all. If they both advertise on TV, each will earn a profit of $3000. If they both advertise on radio, each will earn a profit of $5000. If neither advertises at all, each will earn a profit of $10,000. If one advertises on TV and the other advertises on radio, then the one advertising on TV will earn $4000 and the other will earn $2000. If one advertises on TV and the other does not advertise, then the one advertising on TV will earn $8000 and the other will earn $5000. If one advertises on radio and the other does not advertise, then the one advertising on radio will earn $9000 and the other will earn $6000. If both follow their dominant strategy, what will George do and how much will he earn?

A	advertise on TV and earn $3000
B	advertise on radio and earn $5000
C	advertise on TV and earn $8000
D	not advertise and earn $10,000

Question 28

A monopolist faces market demand given by P = 80 - Q. For this market, MR = 80 - 2Q and MC = 20. What is the deadweight loss due to the monopoly?

A	$300
B	$450
C	$600
D	$900