Eco 550 final exam answers set 1

industrial users. But contrary to price discrimination, large industrial users generally are charged ____ rates.

A). similar, similar B). elastic, lower C). elastic, higher D). inelastic, lower E). Inelastic, higher 11) When the cross elasticity of demand between one product and all other products is low, one is generally referring to a(n) ____ situation.

A). Oligopoly B). Monopoly C). pure competition D). substitution E). monopolistic competition 12) In natural monopoly, AC continuously declines due to economies in distribution or in production, which tends to found in industries which face increasing returns to scale. If price were set equal to marginal cost, then: A). Price would equal average cost.

B). price would exceed average cost.

C). price would be below average cost.

D). price would be at the profit maximizing level for natural monopoly 13) A(n) ____ is characterized by a relatively small number of firms producing a product.

A). Monopoly B). Syndicate C). Cooperative D). Oligopoly 14) In 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