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34 views3 pages

Micro F

Uploaded by

Alexander Zewdu
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© © All Rights Reserved
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AAMBC Dire Dawa Campus

Microeconomics Final Exam for BM II Yr BA extension students (50pts)


Part I Multiple choice- choose the best answer (30pts) Time Allowed 2:30
Suppose that the market demand and cost functions of duopoly are P=100 − 0.5 ( Q1+ Q2 )
2
TC 1=5Q 1 ; TC 2=0.5 Q2 Answer question (1-3)
1.Find the reaction function, equilibrium outputs and price for each firm using cournot’s duopoly model
A.[Q 1=95− 0.5 Q 2 ; Q2=50 − 0.25 Q 1 ; Q 1=80 ; Q 2=30; P=100]
B. [Q 1=50 − 0.5Q 2 ; Q2=50 − 0.25Q1 ; Q 1=30 ; Q 2=80; P=45 ]
C.[Q 1=95− 0.5 Q 2 ; Q2=50 − 0.25 Q 1 ; Q 1=80 ; Q 2=30; P=55]
D.[Q 1=95− 0.5 Q 2 ; Q2=50 − 0.25 Q 1 ; Q 1=80 ; Q 2=30; P=45 ]
2. If firm 2 is assumed to be Stackleberg’s sophisticated leader, the output and profit for each firm will be

A. [ Q1=35 ; Q 2=77.5 ; ; π 1=918.75 ; π 2=3003 ] [ 280


C. Q1=
3
80
; Q2= ; π 1=3267 ; π 2 =711
3 ]
B. [ Q1=35 ; Q 2=77.5 ; π 1=3267 ; π 2=711 ] [
D. Q1=
280
3
80
; Q2= ; π 1=918.75 ; π 2 =3003
3 ]
3. If two firms form cartel, what will be the output and price
A. [ Q1=90; Q 2 =5 0; P=50 ] C. [ Q1=5 ; Q 2=50 ; P=50 ]
B. [ Q1=90; Q 2 =5; P=52.5 ] D. [ Q1=5 ; Q 2=5 ; P=5 2.5 ]
4.Suppose a dupolistic industry with P= A − ( Q 1 +Q 2 ) & TC 1=B ; TC 2=C the output and price are
A A A A A A A
A.[ 3 , 3 ] B. [ 2 , 3 ] C. [ 3 , 2 ] D. [ 4 ,
A
]
2
20
5. Given P=30 − 5Q ; ATC= ＋4Q－6 for a monopolistic competition market, Q , P and π will be
Q
A. [16, 2, 20] B. [20, 2, 16] C.[2, 16, 20] D. [2, 20, 16]
6. Given TC=5 Q+20 ; Q 1=55 − P1; Q 2=70 − 2 P2 for 3 degree price discriminationQ 1,Q 2 , P1 , P2
rd

A. [20, 30, 30, 25] B [30, 25, 30, 20] C. [25, 30, 30, 20] D. [25, 20, 30, 30]
7. The reaction function for firm 2 can be expressed as
A. Q 1=f (Q2 ) B. Q 2=f (Q1 ) C. Q 2=f (Q2 ) D. Q 1=f (Q1 )
8.Which of the following is a distinctive feature of monopolistic competition?
A.Product differentiation B. Freedom entry and exist C.PriceD. Number of sellers and buyers
9.In a perfectly competitive markets, one of the following is true.
A.Products are heterogeneous. C.There are large number of buyers and sellers.
B.Entry and exit are restricted. D. There are very few numbers of buyers and sellers.
10.The profit maximization condition under monopolistically competitive condition MR is
A.equal to rising Long Run Marginal Cost. C.equal to falling Long Run Marginal Cost.
B.less than rising Long Run Marginal Cost. D.greater than falling Long Run Marginal Cost.
11.In which one of the following market structures individual firms do NOT have power to decide the
price of the goods they produce?
A.Competitive B. Monopoly C. Monopolistic D. Oligopoly

1
12.In which one of the following market structures does a producer face the entire demand curve?
A.Pure competition B. monopolistic C. oligopoly D. pure monopoly
13.Which of the following is applicable only to perfectly competitive firms?
A. MP = MC B.MC = P C. AP = AR D. MR = MP
14.A purely monopolistic industry:
A.has no entry barriers. C.produces a product or service for which there are many close
substitutes.
B.has a downward sloping demand curve. D.earns only a normal profit in the long run.
15.Pure monopolists may obtain economic profits in the long run because:
A.of advertising. B.of barriers to entry. C.MR is constant as sales increase. D.of rising AFC
16.Which of the following approximates a pure monopoly?
A.the telecommunication market B.the diamond market C.the garment market D.the soft drink market
17.The non-discriminating monopolist's demand curve:
A.is less elastic than a purely competitive firm's demand curve. C.coincides with its MR curve
B.is perfectly elastic. D.is perfectly inelastic
18.The demand curve faced by a pure monopolist:
A.may be either more or less elastic than that faced by a single purely competitive firm.
B.is less elastic than that faced by a single purely competitive firm.
C.has the same elasticity as that faced by a single purely competitive firm.
D.is more elastic than that faced by a single purely competitive firm.
19.In collusive oligopoly models,there is no A. collusion B.interdependence C.competition D. selling cost
20. For a monopolist TR will be maximum when A. e d =1 B. e d <1 C. e d >1 D. e d =0
Part II Matching ( 15pts)
Column A Column B
21. P> ATC A. Shut down
22. P= ATC B. Loss
23. AVC< P< ATC C. Non-collusive model
24. P= AVC D. No operation
25. P< AVC E. Many buyers and sellers
26. Kinked demand curve F. Very few sellers
27. Low cost price leader G. Single seller
28. Perfect competition H. Economic profit
29. Monopoly I. Break-even point
30. Oligopol J. Collusive model
31. Quantity leadership K. Stackleberg Model
32. Simultaneous quantity setting L. Cournot Model
33. Simultaneous price setting M. Bertrand Model
34. Joint quantity setting N. Cartel
35. The first mover O. Stackleberg’s leader
Part III Fill in the blank ( 5 pts)
36.If one firm gets to set its price before the other firm, we call it___________________ and the
other firm_______________________.
37.Monopolist profit will be maximum and will attain equilibrium at _______________________
38.____________________ is a formal agreement among firms in an oligopolistic industry to allocate
market share and/or industry profits.
39.When there are only two firms in the industry, it is called__________________________

2
Full Name___________________________________________dept___________________

Part I Multiple Choice Part II Matching


1. 6 11 16 21 26 31
2 7 12 17 22 27 32
3 8 13 18 23 28 33
4 9 14 19 24 29 34
5 10 15 20 25 30 35

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