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Economics Experiment

Economics Experiment.

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Economics Experiment

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  1. Economics Experiment Are you interested in participating in an economics experiment where you will have chance to win a new iPod Touch (with video, wireless internet and 16GB storage) ? The experiment involves answering multiple-choice questions based on material in this course. The experiment will take place online. If you are interested in participating, please go to the following web site for more information: web.econ.ucsb.edu/study/signup

  2. A monopolist is currently selling 50 units at $100 each. In order to sell one more unit, he would have to cut the price to $99. What is his marginal revenue? • $100 • $99 • $75 • $49 • $29

  3. Why is that? • To sell one more unit he needs to cut price by $1. He gets $99 for the extra unit he sells, but he loses $1 on each of the 50 units he was selling at $100. So his marginal revenue is $99-50=$49.

  4. The Chairman of Sotheby’s was sent to jail for the crime of • Price Discrimination • Art Forgery • Embezzlement • Colluding on Prices • Tax Evasion

  5. The demand curve has the equation P=100-2Q. At what quantity is marginal revenue equal to zero? • Q=80 • Q=60 • Q=50 • Q=40 • Q=25

  6. With linear demand, MR is a straight line with same intercept, twice as steep as demand.MR=100-4Q 100 Green Line Demand Curve 100-2Q Pink Line MR curve, 100-4Q 25 50

  7. And back to our lecture

  8. A monopolist who is able to practice perfect price discrimination will sell more units than a monopolist who must charge the same price for every unit sold. • True • False

  9. A monopolist who is able to practice perfect price discrimination will sell the same quantity that would be sold if the industry were competitive. • True • False

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