ECN 601 Topic 8 Exam 2 (40 Multiple Choice)

1. Question:Forjointlyownedsubstituteproducts,cannibalizationleads toMR MC. 2. Question:Use the table provided to answer the following question. If the groups are of equal size andthe firm can onlysetoneprice,howshould the firmpricethehigh-end wok? 3. Question:TheoptimalstrategyinaVickeryauctionisto: 4. Question:Whichofthefollowingisascreenagainstadverseselection? 5. Question:The general rule to increase profits when two close complementary brands are jointly ownedis: 6. Question:Indirectpricediscriminationdiffersfromdirectpricediscriminationbecause: 7. Question:Thetradeoffbetween and isrepresentedasthelaborsupplycurve. 8. Question:WhichofthefollowingwouldnotbeillegalaccordingtotheRobinson-PatmanAct? 9. Question:AnHVACcompanyissellingheatingandcoolingequipment.Ithasseparatesalesandmarketingunits.Themarketing unitwouldwantto: 10. Question:Nashequilibriumis: 11. Question:Fordirectpricediscrimination toworkeffectively: 12. Question:Inatwo-personrepeated game,atit-for-tatstrategyis: 13. Question:Half of all your potential customers would pay $10 for your product, but the other half wouldonlypay$8.Youcannottellthemapart.Yourmarginalcostsare$4.Ifyousetthepriceat$8,theexpectedprofitis: 14. Question:You experimentby offeringfreewarrantiesforyourproduct inmarketAbut notinmarketB.Sales inMarketArisefrom240to 360unitsperweekwhile salesin Market Brisefrom410to430.Thedifference-in-differenceestimateoftheeffectofthefreewarrantyis: 15. Question:Usethetableprovidedtoanswerthefollowingquestion.Ifthefirmdecides toonlyofferthehigh-endwok, what is thehighest priceitcan chargethechefs? 16. Question:Threepossibilities areequallylikelyandhavepayoffsof$6,$12,and$24.Theexpectedvalue is: 17. Question:ViceroyVacationsisdecidingonhowtopriceitsvacationpackages.Whichofthefollowingstrategieswould you suggest? 18. Question:Whichofthefollowingisnotanexampleofriskaversion? 19. Question:Inaprincipal-agentrelationship 20. Question:Whatisitcalledwheneachadditional workerhiredcontributessuccessivelysmalleramountsofoutput? 21. Question:Whichofthefollowingisaviolationofantitrust laws? 22. Question:Whichofthe followingistrue? 23. Question:Tom wants to avoid any accidents on the work floor of his factory. If an accident does occur,it would cost him $500,000 in damages. Installing safety equipment would decrease theprobability ofanaccidentoccurringfrom20%to10%.However,theequipmentcosts$20,000toinstall.What is hisexpectedloss after installingthesafety equipment? 24. Question:Tom wants to avoid any accidents on the work floor of his factory. If an accident does occur,it would cost him $500,000 in damages. Installing safety equipment would decrease theprobability ofanaccidentoccurringfrom20%to10%.However,theequipmentcosts$20,000toinstall.WouldTominstallthesafetyequipment? 25. Question:Moralhazardimpliesthat: 26. Question:Thepricing ruleMR=MCholdsfor: 27. Question:Jimhasabetterchanceofhavinghisofferaccepted,sincethesellerdoesnothaveanyoutside offers. 28. Question:Comparedtosimplepricing,pricediscriminationleadsto: 29. Question:IftheVPofaproductlaunch thinks that aparticularproductwouldbeprofitable,butended up launchinganunprofitableproduct, thiswillbea: 30. Question:Foraproductionfunctionwithadiminishing,butpositive,marginal productoflabor: 31. Question:Acquiring a firm that sells a substitute good would make the demand curve for your original product ~ 32. Question:The general rule to increase profits when two close substitute brands are jointly owned is ~ 33. 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 ~ 34. Question:Which of the following is an example of price discrimination? 35. 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 ~ 36. Question:The consequences of price discrimination are ~ 37. Question:Movie theatres offer seniors discounts because ~ 38. Question:When a firm practices perfect price discrimination, 39. 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 ~ 40. Question:In which of the following cases does the Robinson-Patman act not apply?