Exam 3 Spring 2013 Question 1. 1. In the market structure called monopolistic competition (Points : 1) | a. Very little advertising will occur b. There are only a few companies in t he industry c. These industries offer only few products X d. None of the above | | Question 2. 2. In a purely competitive industry (Points : 1) | a. Products are differentiated b. A large amount of advertising occurs c. Price will be higher than in other market structure X d. None of the above | Question 3. 3. A used lawn mower is an example of (Points : 1) | a. a search good X b. an experience good c. a homogenous good d. None of the above | Question 4. 4. The problem of asymmetric information can be overcomed by (Points : 1) | a. Reputation b. Brand name c. Warranties X d. All of the above e. None of the above | Question 5. 5. The CAPM can be used to: (Points : 1) | a. Determine a company's cost of using bonds to raise capital b. Estimate the rish premium a company must pay to raise money by issuing stocks c. Shows the relation between risk and return for stocks in thewhole market d. Can not be used to determine a company's cost of issuing stocks X e. b and c | Question 6. 6. Given TC=10+5Q, ED=-2, what price will a monopolist charge? (Points : 1) | a. 5 b. 12 c. 8 X d. 10 e. None of the above | Question 7. 7. The monopolist determines optimal output the same way as does a purely competitive industry (Points : 1) | X a. True b. False | Question 8. 8. Given a company with some monopoly power and ED=-3, MC=6, the optimal markup is (Points : 1) | a. 33% X b. 50% c. 72%