Question

Assume that two identical firms in a purely oligopolistic industry selling a homogenous product agree to share the maket equally. The total market demand function for the commodity is Qd = 240 - 10P. The cost schedules of the firms are given in the following table:

q1 40 50 60 80 q2 50 70 100

SMC1 (Rs.) 8 10 12 16 SMC1 (Rs.) 4 6 9

SAC1 (Rs.) 13 12.3 12 13 SAC1 (Rs.) 7 6 7

Question 1: Profits for this firm will be:

a. Rs. 420

b. Rs. 130 (wrong)

c. Rs. 350

d. Rs. 450

Question 2: When q1 = 40, What will be MR1?

a. 2

b. 8

c. 5

d. 4

Question 3: When q1 = 40, what will be the profit maximising output for the first firm?

a. 30

b. 60

c. 40

d. 20

Question 4: When q1 = 50, what will be MR1?

a. 7

b. 2

c. 4

d. 3

Question 5: When q1 = 60, what will be MR1?

a. 0

b. 2

c. 4

d. 6

Question 6: When q1 = 80, what will be MR1?

a. 7

b. -4

c. 5

d. -8

Question 7: When q2 = 100, then MR2 will be

a. 16

b. 32

c. -32

d. -16

Question 8: When q2 = 50, price at this level of output will be

a. 12

b. 14

c. 24

d. 32

Question 9: When q2 = 50, then MR2 will be

a. 2

b. 4

c. 5

d. 6

Question 10: When q2 = 70, then MR2 will be

a. 4

b. -9

c. -4

d. -5