A monopolist is using third-degree price discrimination. Which of the following statements are true?

        I.            If a monopolist can use either the first-degree price discrimination or the third-degree price discrimination, then using third-degree price discrimination results in strictly higher profit than using first-degree price discrimination.
      II.            A monopolist using third-degree price discrimination needs to know the willingness to pay of different groups of consumers
    III.            Student discounts are an example of third-degree price discrimination

Group of answer choices

Which of the statements about the short-run are true?

I. Average fixed cost is always declining
II. Because of diminishing marginal product, average variable cost is eventually upward-sloping
III. When marginal cost is below the average total cost, the average total cost is falling as quantity increases

Group of answer choices

only I and II are true

None of the other answers is correct

I, II, and III are true

only I and III are true

only II and III are true

Consider a monopolist facing a demand curve of P = 100 – 20q, where P is market price and q is quantity. The monopolist has a constant marginal cost curve of $50 per unit. What is the monopolist’s marginal revenue curve (MR)?

Group of answer choices

MR = 100 – 40q

MR = 100 – 20q

None of the other answers is correct

MR =200 – 20q

MR = 50

A firm with market power faces an inverse demand curve of P = 100 – 10Q. Assume that the firm faces a marginal cost curve of MC = 10 + 10Q.

(4)a. If the firm cannot price discriminate, what are the profit maximizing levels of output and price?

(4)b. Given you answers in part “a,” what are the values of consumer surplus, producer surplus and deadweight welfare loss?

(4)c. If the firm is able to practice first degree (perfect) price discrimination, what is the firm’s output level?

(4)d. If the firm is able to practice first degree price discrimination, what are the levels of consumer and producer surplus and deadweight welfare loss?

Question 1

a. You sell short 100 shares of stock at a price of $100 per share with an initial margin of 65 percent and maintenance margin of 25 percent. Show this in a “T” balance sheet format, and calculate your margin.

b. Margin =

c. If the price falls to $90 per share, show this in a “T” balance sheet format, and calculate your margin.

d. Margin =

For Levi’s, there are two types of consumers: Spouses who buy jeans for themselves and their spouse, and single people. Spouses are willing to pay $100 for the first pair of jeans, $80 for the second pair, and $0 for any further pairs of jeans. Single people are willing to pay $120 for the first pair of jeans, and $0 for any further pairs of jeans. Assume that there 10 single people and 1 spouse who shop at Levi’s. Which of the following pricing schemes maximizes Levi’s Revenue? Please provide workings as well

P1 is the price of 1st jean purchased, P2 is the price of 2nd jean purchased

a) P1=P2=80
b) P1=100, P2=80
c) P1=120, P2=80
d) P1=120, P2=60

To better understand how husbands and wives feel about their finances, a magazine conducted a national poll of 1,017 married adults age 25 and older with household incomes of $50,000 or more. Consider the following example set of responses to the question "Who is better at getting deals?"

(a)

Develop a joint probability table and use it to answer the following questions. (Round your answers to four decimal places.)

(b)

According to the marginal probabilities, what is the most likely response?

I ammy spouse    we are equal

(c)

Given that the respondent is a husband, what is the probability that he feels he is better at getting deals than his wife? (Round your answer to four decimal places.)

(d)

Given that the respondent is a wife, what is the probability that she feels she is better at getting deals than her husband? (Round your answer to four decimal places.)

(e)

Given a response "My spouse" is better at getting deals, what is the probability that the response came from a husband? (Round your answer to four decimal places.)

(f)

Given a response "We are equal," what is the probability that the response came from a husband?

What is the probability that the response came from a wife?

Use the following data to compute the option price for 3M: Stock price =100; Exercise price=90; Interest rate=5%; Time to expiration= 3 months; Standard deviation = 20% per year; assume zero dividends. B) If the call option above is selling for $14.00 is its implied volatility more than or less than 20%?

Use the following data to compute the option price for 3M: Stock price =100; Exercise price=90; Interest rate=5%; Time to expiration= 3 months; Standard deviation = 20% per year; assume zero dividends. A) According to the Black-Scholes model, what price should we expect for the call option? What price should we expect for the put option? B) If the call option above is selling for $14.00 is its implied volatility more than or less than 20%?

Use the following data to compute the option price for 3M: Stock price =100; Exercise price=90; Interest rate=5%; Time to expiration= 3 months; Standard deviation = 20% per year; assume zero dividends.

A) According to the Black-Scholes model, what price should we expect for the call option? What price should we expect for the put option?

5. There are three oligopolists who compete on quantity. Firm 1 has cost function c1(q1) = 100 + 10q1. Firm 2 has cost function c2(q2) = 100 + 15q2. And firm 3 has cost function c3(q3) = 100 + 20q3. These cost functions apply to each period. The market demand function is 100-p.

   a. In the first period, all firms compete. Find the equilibrium price and consumer surplus, as well as the profit of each firm, and the total surplus.
   b. In the second period, firm 1 has bought out Firm 3. It ceases production in Firm 3’s plant, so there are no longer any fixed costs associated with Firm 3.Find the equilibrium price and consumer surplus, as well as the profit of each firm, and the total surplus.
   c. Should this merger be allowed? Explain briefly (100 words or less)