ECN 601 Topic 8 Exam 2

1. Question:TheoptimalstrategyinaVickeryauctionisto: 2. Question:Tomwantstoavoidanyaccidentsontheworkfloorofhisfactory.Ifanaccidentdoesoccur,itwouldcosthim $500,000 in damages. Installing safety equipment would decrease the probability of an accidentoccurring from 20% to 10%. However, the equipment costs $20,000 to install. What is his expected lossafterinstalling thesafetyequipment? 3. Question:Whichofthefollowingisaviolationofantitrustlaws? 4. Question:Whatisitcalledwheneachadditionalworkerhiredcontributessuccessivelysmalleramountsofoutput? 5. Question:Whichofthefollowingistrue? 6. Question:Foraproductionfunctionwithadiminishing,butpositive,marginalproductoflabor: 7. Question:Whichofthefollowingisnotanexampleofriskaversion? 8. Question:Tomwantstoavoidanyaccidentsontheworkfloorofhisfactory.Ifanaccidentdoesoccur,itwouldcosthim $500,000 in damages. Installing safety equipment would decrease the probability of an accidentoccurring from 20% to 10%. However, the equipment costs $20,000 to install. Would Tom install thesafetyequipment? 9. Question:Inatwo-personrepeatedgame,atit-for-tatstrategyis: 10. Question:ViceroyVacationsisdecidingonhowtopriceitsvacationpackages.Whichofthefollowingstrategieswouldyou suggest? 11. Question:WhichofthefollowingwouldnotbeillegalaccordingtotheRobinson-PatmanAct? 12. Jimhasabetterchanceofhavinghisofferaccepted,sincethesellerdoesnothaveanyoutsideoffers. 13. Question:Moralhazardimpliesthat: 14. Question:Fordirectpricediscriminationtoworkeffectively: 15. Question:Thetradeoffbetween and isrepresentedasthelaborsupplycurve. 16. Question:Thegeneralruletoincreaseprofitswhentwoclosecomplementarybrandsarejointlyownedis: 17. Question:IftheVPofaproductlaunchthinksthataparticularproductwouldbeprofitable,butendeduplaunchingan unprofitableproduct,thiswillbea: 18. Question:YouexperimentbyofferingfreewarrantiesforyourproductinmarketAbutnotinmarketB.SalesinMarket A rise from 240 to 360 units per week while sales in Market B rise from 410 to 430. Thedifference-in-differenceestimateoftheeffectofthefreewarrantyis: 19. Question:AnHVACcompanyissellingheatingandcoolingequipment.Ithasseparatesalesandmarketingunits.Themarketingunit would wantto: 20. Question:Threepossibilitiesareequallylikelyandhavepayoffsof$6,$12,and$24.Theexpectedvalueis: 21. Question:Inaprincipal-agentrelationship 22. Question:Forjointlyownedsubstituteproducts,cannibalizationleadstoMR MC. 23. Question:SeeECN_601ExamNotesUsethetableprovidedtoanswerthefollowingquestion.Ifthegroupsareofequalsizeandthefirmcanonlyset oneprice,how shouldthe firmprice the high-endwok? 24. Question:Usethetableprovidedtoanswerthefollowingquestion.Ifthefirmdecidestoonlyofferthehigh-endwok,what isthe highestprice itcancharge thechefs? 25. Question:ThepricingruleMR=MCholdsfor: 26. Question:Halfofallyourpotentialcustomerswouldpay$10foryourproduct,buttheotherhalfwouldonlypay$8.Youcannottellthemapart.Yourmarginalcostsare$4.Ifyousetthepriceat$8,theexpectedprofitis: 27. Question:Nashequilibriumis: 28. Question:Whichofthefollowingisascreenagainstadverseselection? 29. Question:Indirectpricediscriminationdiffersfromdirectpricediscriminationbecause: 30. Question:Comparedtosimplepricing,pricediscriminationleadsto: