7. Consider a profit-maximizing firm in a perfectly competitive market.  If the market demand for the good this firm sells were to increase (thereby increasing the market price from Po to P1), this firm would have incentive to do what in the short run? (Hint: Think about what the demand curve facing a perfectly competitive firm looks like, and use the graph to help.)

24. I have abided by all rules of Exam #2.

9. Joe’s Bearings operates in a perfectly competitive market in which the market price is $16. The upward sloping marginal cost (MC) curve crosses the U-shaped average variable cost curve at $10 and an output of 100, and continues to increase after that output. The marginal cost reaches $16 at an output of 240.

23. Consider a monopolist depicted on the graph below.     If this firm is a profit maximizer, which of the following rectangular area(s) depicts this firm’s profit?

15. A monopolist is currently producing Q = 200 units of output. The price it is charging is P = $12 and the firm’s average total cost (of producing Q = 200) is ATC = $8. This firm’s profit is

19. Consider a duopoly pricing game (with differentiated products that are substitutes) wherein we compare the non-cooperative Nash Equilibrium and the joint-profit maximizing cooperative arrangement – illustrated in the game matrix below. Give the firms two choices: (1) Play Non-cooperatively (which will have both charging a price of $4 if we solve the game using profit-maximization and simultaneous choice assumption), or (2) Play cooperatively (both charging a price of $4.50). In this game, assume these two choices must be made simultaneously and that we have only a one-period game. What is the Nash Equilibrium of this game?

13. Consider our standard monopoly framework (linear Demand; either constant MC or rising MC).  Suppose the monopolist is a profit maximizer.  Then a decrease in its marginal cost of any given unit of output (due to a decrease in the price of a variable input to production) will lead the monopolist to

20. Refer back to question the previous question. If the two firms make a prior agreement to maximize their joint profit (sum of profits) and can make sure that carrying out the agreement will happen, what would be the outcome?

1. When Firm X produces Q = 10 units, it has an Average Variable Cost of AVC = $36.  When it produce Q = 11 units, it has an Average Variable Cost of AVC = $34.  Thus, the Marginal Cost (MC) of the 11th unit is

Reading Passage for Final Writing Exam In Greek mythology, when baby Achilles was born, a soothsayer (someone who could see the future) predicted that Achilles would die an early death. This worried his mother, so she took him to the magical River Styx. It was said that the river’s water could create a coating of invulnerability. However, when she dipped him into the magical waters, her thumb and forefinger were covering the heel of baby Achilles’ foot so this part of his body was not coated by the magical waters. Later in life, Achilles became a famous warrior who inspired fear in the hearts of many because of his invulnerability. No one could defeat him. Until, in one battle, a poisonous arrow was shot into his unprotected heel. Achilles died shortly thereafter. The term Achilles’ heel has since been used to describe the part of the person or thing that is their weak point, either physically or emotionally. For example, someone on a diet might refer to ice cream as his or her Achilles’ heel. Netflix might be the Achilles heel in a student’s plans to complete homework on time, or the food supply could prove to be our nation’s Achilles’ heel in our fight against the coronavirus. Final Essay Prompts (Select One) What is your Achilles’ heel? Describe something in your life that is your weak point, something that could prevent you from being successful or achieving your goals. Support your main points with specific details, reasons, and examples.  Describe the Achilles’ heel in the life of someone you know well, something that prevents that person from being successful or achieving his or her goals. Support your main points with specific details, reasons, and examples.