Homework Sourse17Assume firm X is one of the three largest firms in an olig
17Assume firm X is one of the three largest firms in an oligopolistic industry. Firm X is currently considering a vertical merger with another firm that is the sole supplier of an input used by all of the firms that compete with firm X. If the merger goes through, firm X would be able to operate much like:
a perfectly competitive firm.
a monopolistically competitive firm.
an oligopolist.
a monopolist.
18The practice of setting price by increasing the average costs of production by some percentage is referred to as:
average cost pricing.
percentage pricing.
rate-of-return pricing.
markup pricing.
19Assume there is a decrease in the number of substitutes for a good produced by a profit-maximizing price-setting firm. All else constant, this would cause the firm\'s ability to markup price above average cost to:
decrease.
stay the same.
increase.
cannot be determined with the information given.
20The practice of charging different prices to various groups of customers that are not based on differences in the costs of production is referred to as:
predatory pricing.
markup pricing.
discretionary pricing.
price discrimination.
| a perfectly competitive firm. | ||
| a monopolistically competitive firm. | ||
| an oligopolist. | ||
| a monopolist. |
Solution
17.
If one of the three largest firms in an oligopolistic market. Firm X considering a vertical merger with the sole supplier of an input used by all the firms would lead to firm X being a monopolist as now that sole supplier would produce only for firm X.
the correct option is (d)
18.
The practise of setting price by increasing average costs of production by some percentage is referred as percentage pricing.
the correct option is (b)
19.
When there is a decrease in number of substitutes of a good means the good is less elastic. All else constant, this would cause firm\'s ability to markup price above average cost to increase.
the correct option is (c)
20.
the practise of charging different prices to various groups of customers that are not based on difference in costs of production is referred as price discrimination.
the correct option is (d)
