1. Which of the following is NOT true with regards to a firm's market power?

2. A monopolist decides to produce a quantity at the level where its marginal revenue equals its marginal cost (MR=MC), charging a single price for every unit sold.Which of the following is true given the above information?

3. Which of the following definitions best describes 'limit output?'

4. Cournot described a market as 'the entire territory of which parts are so united by the relations of unrestricted commerce that prices there take the same level throughout, with ease and rapidity.' Which of the following violates an implicit assumption in the above definition?

5. Which of the two explanations is correct for the following statement? According to Ronald Coase, the existence of an organization is to reproduce the conditions of a competitive market for its factors of production at a lower cost.However, despite the existence of organizations, there will still be market transactions because: I. costs of organizing additional transactions rise with scale and may be the same as that in the market II. the firms may not be able to reproduce the effects of market conditions.

6. Which of the following is not a valid statement with respect to market power?

7. The pay-offs for a certain game are given in the table below.Which of the following types of games best describes the game presented in the table?

8. Which of the following statements best describes economies of scale?

9. Suppose the cost function of a firm showing the minimum cost of producing q units of output is given by C(q).Which of the following intuitively explains the cost function? I. The cost function summarizes the economically relevant production possibilities of the firm. II. The cost function incorporates both technological efficiency (using no more inputs than necessary to produce q) and opportunity cost of inputs.

10. What are the elements of a market failure test that justify regulation in the interest of the public? I. A determination of the feasibility of intervention to correct market inefficiencies. II. The benefits of regulation outweigh the costs associated with regulation.

11. Which of the following is not a possible strategy adopted by incumbents in a market to increase the barrier to entry?

12. Which of the following is not true about regulating a natural monopoly?

13. Which of the following is a suitable explanation of a 'mixed strategy?'

14. A gardener has two helpers who are paid on a daily basis. Between both the helpers, the gardener can only spare $100 a day.If both come to work, the money is divided equally. If only one shows up, he gets the entire amount. The pay-offs for the two helpers are given in the table below. Which of the strategies is a Nash equilibrium?

15. Delite is a firm that produces light bulbs in a perfectly competitive market.The company owner wants to retire and decides to decrease production gradually. If Delite decides to produce less, what effect would the excess demand created by Delite have on the price of light bulbs?

16. Suppose a government agency is planning to build a new office complex in a small town for which it needs to hire both an architect and a construction company.There is only one reputed architect and only one reliable construction company in town.It would be very expensive for the local government to hire workers from out of town, if the local architect and the local construction company decide not to take up the government project.Both the architect and the construction company are not allowed to interact with each other regarding their decision to work for the new office complex and are allowed to give their final decision only once. The table below shows the pay-offs, or the profits (in thousands), that each company will accrue if they decide to work or not for the government.What is the dominant strategy in this game?

17. Assume that a monopolist has the following linear market demand function: P= 160-4Q, where P=price and Q=quantity demanded.The monopolist's average and marginal cost curves are constant, and both always equal to $40.The monopolist charges $120 to people who belong to a certain group (group1) and $60 to people who belong to another group (group2).What is the monopolist's economic profit?

18. Which of the following is true about regulatory risk? I. It refers to the potential for the regulator to holdup the firm beforeit has made its sunk investments.II. An important objective in designing regulatory institutions and enabling legislation is to minimize regulatory risk.

19. A baker purchases some machinery for his bakery in period 1 for $1000 but decides to sell it in period 2 for $600.If the prevailing interest rate is 10% per year, what is the baker's opportunity cost of using the durable asset (the machinery) in period 1?

20. Which of the following kinds of mergers describe the following statement?'Merger of firms involved in different parts of the production process of a good.'

21. Suppose that the cost function (the minimum cost of producing q units of output) in a firm is given by C(q) and the total revenue, determined by the output of the firm is given by R(q). What would be the firm's profit maximizing rule if it wants to stay in business?

22. Which of the following describes the relationship between the Lerner index and the elasticity of demand?

23. In defining an antitrust market, which of the following determines market power?

24. Which of the following best describes the term 'quasi-rents?'

25. Which of the following is true about tacit collusions?