Economics For Managers
1. : MODULE 1
2. price does not affect your WTP: WTP & price
3. The convention for graphing demand curves is to represent price on the
y-axis, and quantity demanded on the x-axis.: demand curve convention
4. An individual's demand curve is typically downward sloping because a
consumer will have a higher WTP for the first unit of a product, but a lower
WTP for subsequent units.
Market demand curves are downward sloping because fewer consumers are
willing to purchase the product at higher prices.: diminishing marginal returns
5. Changes in consumer willingness to pay result in shifts of the demand
curve. For example, an increase in a consumer's WTP for a product will shift
her demand curve outward; a decrease in WTP will shift her demand curve
inward.: shifting demand curve
6. Changes in price correspond to movements along the demand curve: move-
ment along the demand curve
7. Steep curves are often called inelastic. Change in price = large changes in
demand.
Flat curves are often called elastic. Change in price = small changes in
demand.: elasticity
8. the percentage change in quantity demanded divided by the percentage
change in price.: The "price elasticity" of demand
9. tends to increase over time.: price elasticity of demand over time
10. : MODULE 2
11. Randomization helps to account for systematic differences across groups
of interest.
Randomization helps to ensure that the impact measured in a treatment vs.
control group is due solely to the variable that is manipulated in the experi-
ment.
Randomization helps to eliminate the adverse effects of sample selection/se-
lection bias.: In what way does randomization help an experimenter to overcome
the "missing variables" problem?
12. buyers submit increasing bids.
the consumer with the highest WTP wins, typically bidding (and paying) just
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, Economics For Managers
above the consumer with the 2nd highest WTP.: English auctions
open outcry auctions
13. buyers submit sealed bids.
The highest bidder wins the auction, and pays the 2nd highest bid. Bidders
are motivated to bid their exact WTP, to maximize their chance of winning the
product without the risk of overpaying.: Vickrey auctions
Sealed second-price auctions
14. buyers submit sealed bids.
The highest bidder wins the auction and pays what he or she bid. Bidders
might be motivated to bid below their WTP in order to ensure that if they win,
they will capture some value.: Sealed first-price auctions
15. seller time sensitive
value interdependent
buyers' valuations of the item are close together: Auctions are more effective
when...
16. under certain general conditions, each of these types of auctions should
result in approximately the same revenue for the seller. This revenue will be
approximately equal to the 2nd highest bidder's WTP.: Revenue Equivalence
Result
17. he winner of an auction "overpays" for a product - that is, pays more than
what turns out to be the true value of the product.
this tends to occur when the product is worth about the same amount to each
bidder; the winner is the person who most overestimated the value of the
product.: winner's curse
18. firms infer WTP from consumer actions (i.e., what consumers choose),
rather than from what they say: revealed preference
19. uses responses to assign a numerical value (called a "part-worth") to
each feature. Firms can then use these numerical values to predict consumer
reactions to a product, and to decide what product features to offer.: Conjoint
Analysis
20. Advertising
Substitutes and Complements
Network Effects: Strategies to increase demand
21. For substitutes it is positive.
For compliments it is negative.
For no relation, roughly zero.: cross-price elasticity of demand
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1. : MODULE 1
2. price does not affect your WTP: WTP & price
3. The convention for graphing demand curves is to represent price on the
y-axis, and quantity demanded on the x-axis.: demand curve convention
4. An individual's demand curve is typically downward sloping because a
consumer will have a higher WTP for the first unit of a product, but a lower
WTP for subsequent units.
Market demand curves are downward sloping because fewer consumers are
willing to purchase the product at higher prices.: diminishing marginal returns
5. Changes in consumer willingness to pay result in shifts of the demand
curve. For example, an increase in a consumer's WTP for a product will shift
her demand curve outward; a decrease in WTP will shift her demand curve
inward.: shifting demand curve
6. Changes in price correspond to movements along the demand curve: move-
ment along the demand curve
7. Steep curves are often called inelastic. Change in price = large changes in
demand.
Flat curves are often called elastic. Change in price = small changes in
demand.: elasticity
8. the percentage change in quantity demanded divided by the percentage
change in price.: The "price elasticity" of demand
9. tends to increase over time.: price elasticity of demand over time
10. : MODULE 2
11. Randomization helps to account for systematic differences across groups
of interest.
Randomization helps to ensure that the impact measured in a treatment vs.
control group is due solely to the variable that is manipulated in the experi-
ment.
Randomization helps to eliminate the adverse effects of sample selection/se-
lection bias.: In what way does randomization help an experimenter to overcome
the "missing variables" problem?
12. buyers submit increasing bids.
the consumer with the highest WTP wins, typically bidding (and paying) just
1/6
, Economics For Managers
above the consumer with the 2nd highest WTP.: English auctions
open outcry auctions
13. buyers submit sealed bids.
The highest bidder wins the auction, and pays the 2nd highest bid. Bidders
are motivated to bid their exact WTP, to maximize their chance of winning the
product without the risk of overpaying.: Vickrey auctions
Sealed second-price auctions
14. buyers submit sealed bids.
The highest bidder wins the auction and pays what he or she bid. Bidders
might be motivated to bid below their WTP in order to ensure that if they win,
they will capture some value.: Sealed first-price auctions
15. seller time sensitive
value interdependent
buyers' valuations of the item are close together: Auctions are more effective
when...
16. under certain general conditions, each of these types of auctions should
result in approximately the same revenue for the seller. This revenue will be
approximately equal to the 2nd highest bidder's WTP.: Revenue Equivalence
Result
17. he winner of an auction "overpays" for a product - that is, pays more than
what turns out to be the true value of the product.
this tends to occur when the product is worth about the same amount to each
bidder; the winner is the person who most overestimated the value of the
product.: winner's curse
18. firms infer WTP from consumer actions (i.e., what consumers choose),
rather than from what they say: revealed preference
19. uses responses to assign a numerical value (called a "part-worth") to
each feature. Firms can then use these numerical values to predict consumer
reactions to a product, and to decide what product features to offer.: Conjoint
Analysis
20. Advertising
Substitutes and Complements
Network Effects: Strategies to increase demand
21. For substitutes it is positive.
For compliments it is negative.
For no relation, roughly zero.: cross-price elasticity of demand
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