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Micro CA SET 2
Micro CA SET 2
Micro CA SET 2
Semester: IV (2023-24)
Name of the paper: Intermediate Microeconomics
Maximum Marks: 15
1. A firm is selling its product in two markets. In market A the demand is given by QA = 100 − 2P and
in market B the demand is QB = 80 − 4P. The firm’s total cost is C = Q2 /12 where Q = QA + QB is the
total output. Find the profit maximizing quantity, and price if firm can successfully price discriminate
a. QA = 40, QB = 20
b. QA = 30, QB = 20
c. QA = 30, QB = 30
2. Calculate the price elasticities of demand at the equilibrium prices and quantities (as per the above
question)
a. εA = -1.5, εB =- 3
b. . εA = -3 , εB =- 1.5
c. . εA = -1 , εB =- 3
3.A perfectly competitive firm should reduce output or shut down in the short run if market price is
equal to marginal cost and price is
5 A monopolist produces 14,000 units of output and charges $14 per unit. Its marginal revenue is $8,
its marginal cost is $7 and rising, its average total cost is $10, and its average variable cost is $9.
The monopolist should
a. increase output, which will result in an increase in the firm's positive economic profit.
b. increase output, which will reduce the firm's economic losses.
c. shut down, which will reduce the firm's economic losses.
d. decrease output, which will result in an increase in the firm's positive economic profit.
6.In which type of price discrimination does the seller capture the entire consumer surplus?
a) First-degree price discrimination
b) Second-degree price discrimination
c) Third-degree price discrimination
d) Uniform price discrimination
7. A specialized rice grower sells rice in two markets, the United States and Japan, and the marginal
cost is the same in both markets. The price elasticity of demand in the United States is -2.0, and the
price elasticity of demand in Japan is -1.5. If the grower practices multi-market price discrimination,
which country’s consumers will pay a higher price and by how much?
a. The price in the United States will be 3/2 the price in Japan
b. The price in the United States will be 2/3 the price in Japan
c. The price in the United States will be 1/3 the price in Japan
8.A discriminating monopolist will charge a higher price from which group of customers?
a. Group with more elastic
b. Group with less elastic
c. Group with Unitary Elastic
d. Group with Infinitely Elastic
Q9. True/False: A profit maximizing monopolist will always produce an output that is less than the
output that maximizes sales revenue.
a MC above ATC
b. MC above AVC
c. MC Curve