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
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)
B)
C)
D)
E)
$100
$99
$75
$49
$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)
B)
C)
D)
E)
Price Discrimination
Art Forgery
Embezzlement
Colluding on Prices
Tax Evasion
The demand curve has the
equation P=100-2Q. At what
quantity is marginal revenue
equal to zero?
A)
B)
C)
D)
E)
Q=80
Q=60
Q=50
Q=40
Q=25
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
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