Problem 1: A barrier to entry creates an advantage for incumbents over new arrivals. True or false, explain.
Problem 2: Rent control in New York is a prominent example of price floor. True or false, explain.
Problem 3: When price is higher than the marginal revenue but lower than the average variable cost, the monopolist makes losses.
Problem 4: The demand curve faced by a firm in a monopolistically competitive industry is more elastic than the perfectly competitive firm's demand curve. True or false, explain.
Problem 5: An informal agreement to set prices and output is called a cartel. True or false, explain.
Problem 6: When price elasticity of demand is -2, the optimal markup on cost is 50. True or false, explain.
Problem 7: The consumer surplus represents the excess revenues above the cost of output to producers. True or false, explain.
Problem 8: The firm's ability to price discriminate does not depend on how many consumer groups it can identify. True or false, explain.
Problem 9: A natural monopoly exists if marginal revenue is falling as output expands. True or false, explain.
Problem 10: The total utility of money increases for risk averters, risk seekers, and indifferent to risk. However, their marginal utility of money varies. True or false, explain.