PART$-$I.

Question $1.[20$ points$]$ Is the following $($italicized$)$ statement true or false? Explain.

Average variable cost falls when marginal product falls.

Question $2.[20$ points$]$ The demand for seats per game, at a local stadium that seats a maximum of $40$ million per

game, is $P=22-0\mathrm{.}2Q$ where $P$ is the price of a ticket and $Q$ represents the number of seats $($expressed in

millions$).$ Assume that all seats and all games are the same, and marginal cost $=$$$10=$ average cost. Calculate the

maximum profit per game if the local stadium is owned by a monopolist charging the same price for each seat.

PART$-$II$.$

Question $1.[20$ points$]$ Is the following $($italicized$)$ statement true or false? Explain.

Marginal cost rises when average product falls.

Question $2.[20$ points$]$ The demand for seats per game, at a national stadium that seats a maximum of $40$ billion

per game, is $P=22-0\mathrm{.}2Q$ where $P$ is the price of a ticket and $Q$ represents the number of seats $($expressed in

billions$).$ Assume that all seats and all games are the same, and marginal cost $=$$$10=$ average cost. If the per$-$

ticket price must match the marginal cost, calculate the consumer surplus per game.