Question : Aqua Inc. and Blu Corp. the only two producers of : 1377524

Aqua Inc. and Blu Corp. are the only two producers of Good A in Eduland. The figure below shows the residual demand curve for Aqua Inc.

10) Refer to the figure above. The market for Good A in Eduland is an example of a ________.

A) monopoly

B) duopoly

C) monopolistic competition

D) perfect competition

11) Refer to the figure above. If Aqua Inc. charges a price of $70 for each unit of Good A while Blu Corp. charges a price of $50, Blu Corp. will face a demand of ________ units.

A) 1,000

B) 1,500

C) 2,000

D) 3,000

12) Refer to the figure above. Each firm will face a demand of ________ units of Good A if both of them charge a price of $60.

A) $1,000

B) $1,500

C) $2,000

D) $3,000

13) Refer to the figure above. If Aqua Inc. charges a price of $20 for each unit of Good A while Blu Corp. charges a price of $60, Blu Corp. will ________.

A) face the entire market demand

B) lose all its customers to Aqua Inc.

C) face a demand of 2,000 units

D) face a demand of 1,500 units

14) Refer to the figure above. If the marginal cost of producing the last unit of the good is $40, Nash equilibrium will occur when both firms charge a price of ________.

A) $20

B) $40

C) $60

D) $70

15) A duopolist faces the entire market demand for its product if ________.

A) it charges a lower price than its rival

B) it charges a higher price than its rival

C) it charges the same price as its rival

D) it charges a price higher than its cost of production

16) The quantity demanded for a duopolist’s product is zero if ________.

A) it charges a lower price than its rival

B) it charges a higher price than its rival

C) it charges the same price as its rival

D) it can produce the product at a lower cost

17) In a duopoly with homogeneous products, the best response of a firm is to charge a lower price than his rival as long as ________.

A) the rival’s price is above marginal cost

B) the rival’s price is below marginal cost

C) the rival’s price is above average cost

D) the rival’s price is below average cost

18) If firms in a duopoly with homogeneous products compete on price, Nash equilibrium is reached when each firm charges a price ________.

A) equal to its average cost

B) higher than its average cost

C) equal to its marginal cost

D) lower than its marginal cost

19) Which of the following is true when Nash equilibrium is reached in a duopoly with homogeneous products?

A) Both the firms earn positive economic profits.

B) Each firm charges a price equal to its average fixed cost.

C) Both the firms earn zero economic profits.

D) Both firms incur huge losses.

20) La Dila and Swiss Pro are the only two firms in an industry. The firms initially charge equal prices for their products which are perfect substitutes. What happens if La Dila decides to lower its price slightly?

A) La Dila will lose all its market share.

B) Swiss Pro will gain market share.

C) La Dila will face the entire market demand.

D) Swiss Pro will earn positive economic profit.