1. When a firm engages in predatory pricing, what strategy does it use to drive its rivals out of business?
2. If a monopoly is forced to no longer produce where MR=MC but where P=MC what happens to their output and selling prices?
3. When a firm has a marginal cost of $185 and its price elasticity of demand = 6, what is the profit maximizing price that this firm should charge?
4. Which of the following is true about price matching strategies?
a. consumers are often mislead because they believe they are charged the same price as competing firms
b. if one consumer finds a lower price at Firm A, then firm b will match its price to firm a’s price.
c. a risk involved with price matching strategies is that the firm may eventually sell itself out of business by charging a price below their cost of production.
d. often firms don’t require proof of competitors lower prices
5. Which of the following is incorrect?
a. the lower the marginal cost, the higher the profit maximizing price
b. the more inelastic the demand, the higher the profit maximizing markup
c. the more elastic the demand, the lower the profit maximizing markup
d. the higher the marginal cost, the higher the profit-maximizing price.