The market (inverse) demand for cellphones is given by P = 200 - Q and the initial market supply curve is given by P = 100. Due to technological innovation, the firms' MC of production decreases and the new supply curve shifts down to P = 50.

Group of answer choices

Producer surplus remains the same.

Total surplus remains the same as supply is perfectly elastic.

The innovation decreases producer surplus as the equilibrium prices drops to $50.

The innovation raises producer surplus.

Question 14

2pts

Consider a perfectly competitive industry with 50 identical firms. Each firm has a cost function given by C(q) = 90 + 8q + 2q2. The market price is $40. Which of the following is true for a typical firm in this industry?

Group of answer choices

All firms will exit the market in the long run.

Each firm's maximum profit is negative.

The number of firms in the long run will be lower than 50.

Each firm will produce both in the short and long run.

Question 15

2pts

A monopolist faces a demand curve of P = 100 - 2Q, and has costs of C = 50 + 20Q. The monopolist sets a uniform price to maximize profits.

Group of answer choices

Producer surplus is 800.

The profit-maximizing price is 60.

Deadweight loss is 400.

All of the answers are correct.

Question 16

2pts

Suppose a profit-maximizing monopolist faces a downward-sloping linear demand curve and has constant marginal cost. If the (constant) marginal cost shifts up, which of thefollowing is true?

Group of answer choices

The price markup will decrease.

The monopolist will increase the quantity sold to compensate for a lower markup.

The producer surplus could increase or decrease, depending on the price elasticity of demand.

The monopolist will increase the markup to compensate for a lower quantity sold.

Question 17

2pts

Yummy Sandwiches is a profit-maximizing monopolist and has found that the price elasticity of demand for its sandwiches in London is greater in absolute value than in New York City. Yummy's marginal costs are also higher in London. Which of the following is the best answer?

Group of answer choices

It is definitely more profitable to set a lower price in London than in New York City.

It is definitely more profitable to set a higher price in London than in New York City.

It is possible that the profit maximizing price is lower in London than in NYC.

To determine which location should get the higher price, we would require information about the fixed costs of running the restaurant in each location.