Eco550 final part 2 latest 2017


Question 1

4 out of 4 points

Consider the game known as the Prisoner’s Dilemma. What’s the dilemma?

a. By both not confessing, both get to the cooperative solution and minimize time in prison.

b. By both confessing, both get to the noncooperative solution and both serve significant time in prison.

c. As a group, they are better off cooperating by not confessing, but each player has an incentive to be first to confess in a double cross.

d. The problem is that the spies should never have been caught; they should move to Rio.

Question 2

4 out of 4 points

Cooperation in repeated prisoner’s dilemma situations seems to be enhanced by all of the following except

a. limited punishment schemes 

b. clarity of conditional rewards 

c. grim trigger strategy 

d. provocability– i.e ., credible threats of punishment 

e. tit for tat strategy

Question 3

4 out of 4 points

Credibility in threats and commitments in sequential games is based on

a. randomizing one’s actions so they are unpredictable

b. explicit communications with competitors

c. effective scenario planning

d. analyzing best reply responses

e. none of the above

Question 4

4 out of 4 points

When there is no Equilibrium (or no Nash Equilibrium), we expect that:

a. the firms end up in the cooperative strategy.

b. a firm will follow a randomized strategy.

c. a firm will not care what it does.

d. a firm will very likely have a dominant strategy.

Question 5

4 out of 4 points

Credible promises and hostage mechanisms can support a continuous stream of cooperative exchanges except when

a. the promisor is better off fulfilling than ignoring his promise

b. neither party has a prior dominant strategy

c. the hostage can be revoked for just causes

d. the hostage is more valuable than any given exchange

e. the hostage is difficult to replace

Question 6

4 out of 4 points

Which of the following pricing policies best identifies when a product should be expanded, maintained, or discontinued?

a. full-cost pricing policy

b. target-pricing policy

c. marginal-pricing policy

d. market-share pricing policy

e. markup pricing policy

Question 7

4 out of 4 points

Third-degree price discrimination exists whenever:

a. the seller knows exactly how much each potential customer is willing to pay and will charge accordingly. 

b. different prices are charged by blocks of services. 

c. the seller can separate markets by geography, income, age, etc ., and charge different prices to these different groups. 

the seller will bargain with buyers in each of the markets to obtain the best possible price.

Question 8

4 out of 4 points

Firms that have a cover charge for their customers and charge for each item they purchase as well are exhibiting

a. universal access price discrimination 

b. declining block price discrimination. 

c. mixed bundling price discrimination. 

d. two-part price discrimination. 

e. uniform pricing 

Question 9

4 out of 4 points

The segmenting of customers into several small groups such as household, institutional, commercial, and industrial users, and establishing a different rate schedule for each group is known as:

a. first-degree price discrimination
b. market penetration
c. third-degree price discrimination
d. second-degree price discrimination
e. none of the above

Question 10

4 out of 4 points

____ is the price at which an intermediate good or service is transferred from the selling to the buying division within the same firm.

a. Incremental price 

b. Marginal price 

c. Full-cost price 

d. Transfer price 

e. none of the above

Question 11

4 out of 4 points

When someone contracts to do a task but fails to put full effort into the performance of an agreement, yet the lack of effort is not independently verifiable, this lack of effort constitutes a

a. breach of contractual obligations 

b. denial of good guarantee 

c. loss of reputation 

d. moral hazard 

Question 12

4 out of 4 points

Governance mechanisms are designed

a. to increase contracting costs 

b. to resolve post-contractual opportunism 

c. to enhance the flexibility of restrictive covenants 

d. to replace insurance 

e. none of the above 

Question 13

4 out of 4 points

Which of the following is not among the functions of contract?

a. to provide incentives for efficient reliance

b. to reduce transaction costs

c. to discourage the development of asymmetric information

d. to provide risk allocation mechanisms

Question 14

4 out of 4 points

When retail bicycle dealers advertise and perform warranty repairs but do not deliver the personal selling message that Schwinn has designed as part of the marketing plan but cannot observe at less than prohibitive cost, the manufacturer has encountered a problem of ____.

a. reliance relationships

b. uncertainty

c. moral hazard

d. creative ingenuity

e. insurance reliance

Question 15

4 out of 4 points

When borrowers who do not intend to repay are able to hide their bad credit histories, a lender’s well-intentioned borrowers should

a. complain to regulatory authorities 

b. withdraw their loan applications 

c. offer more collateral in exchange for lower interest charges 

d. divulge still more information on their loan applications 

e. hope for a pooling equilibrium

Question 16

4 out of 4 points

The ____ is equal to the some of the squares of the market shares of all the firms in an industry.

a. market concentration ratio 

b. Herfindahl-Hirschman index 

c. correlation coefficient 

d. standard deviation of concentration 

e. none of the above

Question 17

4 out of 4 points

The antitrust laws regulate all of the following business decisions except ____.

a. collusion 

b. mergers 

c. monopolistic practices 

d. price discrimination 

e. wage levels

Question 18

4 out of 4 points

The lower the barriers to entry and exit, the more nearly a market structure fits the ____ market model.

a. monopolistic competition 

b. perfectly contestable 

c. oligopoly 

d. monopoly 

e. none of the above

Question 19

4 out of 4 points

The sentiment for increased deregulation in the late 1970’s and early 1980’s has been felt most significantly in the price regulation of

a. coal 

b. grain 

c. transportation 

d. automobiles 

e. electric power generation

Question 20

4 out of 4 points

____ occurs whenever a third party receives or bears costs arising from an economic transaction in which the individual (or group) is not a direct participant.

a. Pecuniary benefits and costs 

b. Externalities 

c. Intangibles 

d. Monopoly costs and benefits 

e. none of the above

Question 21

4 out of 4 points

If the acceptance of Project A makes it impossible to accept Project B, these projects are:

a. contingent projects 

b. complementary projects 

c. mutually inclusive projects 

d. mutually exclusive projects 

e. none of the above

Question 22

4 out of 4 points

The social rate of discount is best approximated by:

a. the cost of government borrowing

b. the opportunity cost of resources taken from the private sector

c. 3 percent

d. 30 percent

e. none of the above

Question 23

4 out of 4 points

Which of the following items is (are) not considered as part of the net investment calculation?

a. the first year’s net cash flow

b. increase in net working capital

c. salvage of an old piece of equipment that is being replaced

d. installation and shipping charges

Question 24

4 out of 4 points

All of the following except ____ are shortcomings of cost-benefit analysis.

a. difficulty in measuring third-party costs

b. difficulty in measuring third-party benefits

c. failure to consider the time value of benefits and costs

d. difficulty of accounting for program interactions

e. a and b

Question 25

4 out of 4 points

In cost-effectiveness analysis, constant cost studies:

a. are rarely used

b. attempt to specify the output which may be achieved from a number of alternative programs, assuming all are funded at the same level

c. are useless because they fail to adequately evaluate program benefits

d. try to find the least expensive way of achieving a certain objective

e. none of the above

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