ECN 601 Topic 8 Exam 2 Formula Sheet

1. Question:Indirectpricediscrimination differsfromdirectprice discriminationbecause: 2. Question:What is it called when each additional worker hired contributessuccessively smalleramountsofoutput? 3. Question:Jim has a better chance of having his offer accepted, since the seller doesnothaveanyoutsideoffers. 4. Question:For a production function with a diminishing, but positive, marginal productoflabor: 5. Question:Nashequilibriumis: 6. Question:Moralhazardimpliesthat: 7. An HVAC company is selling heating and cooling equipment. It has separate sales and marketing units. The marketing unit would want to: (Not A or D) 8. Question:If the VP of a product launch thinks that a particular product would beprofitable,butendeduplaunchinganunprofitableproduct,thiswillbea: 9. Question:Half of all your potential customers would pay $10 for your product, but theother half would only pay $8. You cannot tell them apart. Your marginal costsare$4.Ifyousetthepriceat$8,theexpectedprofitis: 10. Question:Whichofthefollowingisascreenagainstadverseselection? 11. Question:Comparedtosimplepricing,pricediscriminationleadsto: 12. Question:Use the table provided to answer the following question. If the firmdecidestoonlyofferthehigh-endwok,whatisthehighestpriceit canchargethechefs? 13. Question:Which of the following would not be illegal according to the Robinson- Patman Act? (Not B or D) 14. Question:Inatwo-person repeatedgame,atit-for-tatstrategyis: 15. Question:The tradeoff between ____ and _____ is represented as the labor supply curve. (Not A or C) 16. Question:Youexperimentbyofferingfreewarranties for yourproductinmarket AbutnotinmarketB.SalesinMarketArisefrom240to360unitsperweekwhile sales in Market B rise from 410 to 430. The difference-in-differenceestimateoftheeffectofthefreewarrantyis: 17. Question:Tom wants to avoid any accidents on the work floor of his factory. If anaccidentdoesoccur,itwouldcosthim$500,000indamages.Installingsafetyequipmentwoulddecreasetheprobabilityofanaccidentoccurringfrom20%to10%.However,theequipmentcosts$20,000toinstall.Whatishisexpectedlossafterinstallingthe safetyequipment? 18. Question:Threepossibilitiesareequallylikelyandhavepayoffsof$6,$12,and$24.Theexpectedvalueis: 19. Question:The general rule to increase profits when two close complementary brands are jointly owned is ( Not B) 20. Question:Whichofthefollowingisnotanexampleofriskaversion? 21. Question:For directpricediscrimination toworkeffectively: 22. Question:Tom wants to avoid any accidents on the work floor of his factory. If anaccidentdoesoccur,itwouldcosthim$500,000indamages.Installingsafetyequipmentwoulddecreasetheprobabilityofanaccidentoccurringfrom20%to10%.However,theequipmentcosts$20,000toinstall.WouldTominstallthesafetyequipment? 23. Question:Usethetableprovidedtoanswerthefollowingquestion.Ifthegroupsareof equal size and the firm can only set one price, how should the firm price thehigh-endwok? 24. Question:Whichofthefollowingistrue? 25. Question:Whichofthefollowingisaviolationofantitrust laws? 26. Question:TheoptimalstrategyinaVickeryauctionisto: 27. Question:ViceroyVacationsisdecidingonhowtopriceitsvacationpackages.Whichofthefollowingstrategieswouldyousuggest? 28. Question:Inaprincipal-agentrelationship 29. Question:The pricing rule MR=MC holds for: 30. Question:For jointly owned substitute products, cannibalizationleadstoMR MC. 31. Question:For a production function with a diminishing, but positive, marginal product of labor: 32. Question:Acquiring a firm that sells a substitute good would make the demand curve for your original product ~ 33. Question:The general rule to increase profits when two close substitute brands are jointly owned is ~ 34. Question:After acquiring closely substitutable product brands, a firm can successfully raise prices on both of the brands without losing much of its total sales because ~ 35. Question:Which of the following is an example of price discrimination? 36. Question:The practice of buying a firm’s good in one market at a low price and selling it in another market for a higher price in order to profit from the price difference is known as ~ 37. Question:The consequences of price discrimination are ~ 38. Question:Movie theatres offer seniors discounts because ~ 39. Question:When a firm practices perfect price discrimination, 40. Question:Public transit offers discounted monthly passes to students, which can only be bought and used with valid student IDs. The transit system is using ~