If a cartel seeks to maximize profits, the market share (or quota) for each firm should be set at a level such that the ____ of all firms is identical.
a. average total cost
b. average profit
c. marginal profit
d. marginal cost
e. marginal revenue
QUESTION 2It is illegal for business to price discriminate when selling goods to other businesses unless
a. Price discounts are cost-justified
b. Discounts are offered to meet competitors' price
c. Both a and b
d. It is not illegal for businesses to price discriminate
QUESTION 3Symmetry of net substitution effects is one of the principal conclusions of the theory of utility maximization. Which two mathematical theorems are used to prove this symmetry?
a. Taylor's Theorem and Fundamental Theorem of Calculus
b. Cauchy's Theorem and DeMoivre's Theorem
c. Lagrangian Theorem and Fundamental Theorem of Calculus
d. Envelope Theorem and Young's Theorem
QUESTION 4In the Cournot duopoly model, each of the two firms, in determining its profit-maximizing price-output level, assumes that the other firm's ____ will not change.
a. price
b. output
c. marketing strategy
d. inventory
e. none of the above
QUESTION 5Arbitrage
a. Is the act of to buying low in one market and selling high in another market
b. Can force a seller to go back to uniform pricing
c. Can defeat direct price discrimination
d. All of the above
QUESTION 6For the Composite Commodity Theorem to hold, all goods in the composite must:
a. have constant prices.
b. have constant relative prices.
c. be used in fixed proportions.
d. be net complements.
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