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.

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Presentation transcript:

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. web.econ.ucsb.edu/study/signup If you are interested in participating, please go to the following web site for more information:

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? A)$100 B)$99 C)$75 D)$49 E)$29

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.

The Chairman of Sotheby’s was sent to jail for the crime of A)Price Discrimination B)Art Forgery C)Embezzlement D)Colluding on Prices E)Tax Evasion

The demand curve has the equation P=100-2Q. At what quantity is marginal revenue equal to zero? A)Q=80 B)Q=60 C)Q=50 D)Q=40 E)Q=25

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

And back to our lecture

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. A)True B)False

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