Version A

I. Multiple Choice

(1)a. (2)b. (3)b. (4)c. (5)a. (6)a. (7)d. (8)a. (9)d. (10)b.

II. Problems

(1) [Marginal revenue, monopoly pricing: 22 pts]

1. Revenue = $700, $1200, $1500, $1600, $1500;
2. Marginal revenue = $50, $30, $10, $-10;
3. 30 sweatshirts;
4. $50.

(2) [Marginal revenue, monopoly pricing, welfare analysis: 24 pts]

1. $16;
2. $4;
3. Marginal revenue is a straight line with intercepts at P=$19 and Q=950;
4. 600 devices;
5. $13;
6. $900.

(3) [Marginal revenue, monopoly pricing: 16 pts]

1. MR = 25 - (Q/100);
2. 2000;
3. $15;
4. $20,000.

(4) [Monopoly, markup formula, Lerner index: 8 pts]

1. $60;
2. L = 2/3 = 0.667.

(5) [Structure-Conduct-Performance paradigm: 10 pts]

1. performance;
2. structure;
3. conduct;
4. structure;
5. conduct.

Version B

I. Multiple Choice

(1)b. (2)c. (3)c. (4)b. (5)b. (6)b. (7)a. (8)b. (9)d. (10)c.

II. Problems

(1) [Marginal revenue, monopoly pricing: 22 pts]

1. Revenue = $500, $900, $1200, $1400, $1500;
2. Marginal revenue = $40, $30, $20, $10;
3. 30 sweatshirts;
4. $40.

(2) [Marginal revenue, monopoly pricing, welfare analysis: 24 pts]

1. $12;
2. $2;
3. Marginal revenue is a straight line with intercepts at P=$13 and Q=1300;
4. 800 devices;
5. $9;
6. $800.

(3) [Marginal revenue, monopoly pricing: 16 pts]

1. MR = 35 - (Q/100);
2. 3000;
3. $20;
4. $45,000.

(4) [Monopoly, markup formula, Lerner index: 8 pts]

1. $25;
2. L = 1/5 = 0.2.

(5) [Structure-Conduct-Performance paradigm: 10 pts]

1. structure;
2. conduct;
3. performance;
4. structure;
5. conduct.

[end of answer key]