Tackle the Test: Free-Response Questions

  1. Question

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    Refer to the table provided to answer the following questions. Assume that marginal cost is zero.Demand Schedule

    Rubric for FRQ 1 (7 points)

    1 point: If the market is perfectly competitive, price will be zero.

    1 point: If the market is perfectly competitive, quantity will be 12.

    1 point: Price equals marginal cost in the long-run equilibrium of a perfectly competitive market, so price will be zero, at which price the quantity is 12.

    1 point: If the market is a duopoly, price will be $12.

    1 point: If the market is a duopoly, quantity will be 6.

    1 point: In order to maximize joint profits, the two firms would act as a monopoly, setting marginal revenue equal to marginal cost and finding price on the demand curve above the profit-maximizing quantity. Marginal revenue passes through zero (going from 2 to −2) after the 6th unit, making 6 the profit-maximizing quantity. The most consumers would pay for 6 units is $12, so that is the profit-maximizing price.

    1 point: Total revenue is $12 × 6 = $72. By dividing this equally, each firm receives $36.

  2. Question

    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