True / False:

1. Firm A and firm B make swords from valyrian steel (a particular kmd of steel) and sell these swords to fans ofthe hit HBO series Ganle of Thrones (GOT) at extremely high and inflated margins. Making the swords Is not very difficult but does require the valyrian steel (Note that you do not need to know anything about the series GOT to answer this questlon_) Producing valyrian steel is simple If you have access to a mine. Until recently, valyrlan steel was only found in tvo mines, both with abundant deposits ofvalyrlan steel One of the mines is owned by firm A and the Odier is owned by firm B. Now a new source of valyrian steel has been found and acquired by the Society for GOT Fans, a fan organization dedicated to making GOT fans happy _ This will likely raise the profits of firms A and B (Perhaps by reuctng supplier power) _ 2. Firm A and firm B make swords from valyrian steel (a particular kind of steel) and sell these swords to fans of the hit HBO series Game of Thrones (GOT) at extremely high and inflated margins. Making the swords is not vely difficult but does require the valyrian steel. (Note that you do not need to know anything about the series GOT to answer this question) GOT fans like to dress up like characters from the show: the more realistic the better: and everyone agrees that the best characters from the show carry valyrian swords and wear wolfskin clothing: as these are two strong complements. However: GOT fans have a limited budget to spend on such outfits. A long, glorious wmter has led to a surge in the wolf population: and a consequent decline in the price of wolfskin clothing. This w tll likely raise the profits affirms A and B 3 Firms A and B are the twao dominant players in the highly profitable market for high-tech farmmg tractors: controlling the entire market between them. These tractors can be programmed by farmer-operators to do many tasks. Because of a variety of technical issues and safety regulations: becoming certified to use any one ofthe two tractor systems is costly and time-consuming. The CEOs ofthese two companies would be wise to adopt a common industry-wide standard for technolozv and sgfety, that would allow a farmer-operator trained tn this standard to use any high-tech tractor system 4. Firm X sell very' different products, with those of Firm X specialized to help buyers in the industrial sector (who need many bells and whistles): and those of Firm Y specialized to help buyers m the consumer sector (who value ease of use and simpllclty). There is likely to be a strong market power effect 5 There are five similar firms in a downstream market that purchase some important input X from a monopolistic upstream supplier M. Success in the upstream market requires extensive I? , all of which Is ouned by M. The dounstream market Is characterized by low product differentiation and low entry barriers. To reduce the power of their supplier: the downstream firms decide to consolidate. This ts likely to substantially raise the long- run profits ofthese downstream firms.