Question 1
In a game, a dominated strategy is one where:
Answer
It is always the best strategy
It is always the worst strategy
It is the strategy that is the best among the group of worst possible strategies.
Is sometimes the best and sometimes the worst strategy
Question 2
Cooperation in repeated prisoner's dilemma situations seems to be enhanced by all of the following except
Answer
limited punishment schemes
clarity of conditional rewards
grim trigger strategy
provocability--i.e., credible threats of punishment
tit for tat strategy
Question 3
Consider the game known as the Prisoner's Dilemma. What's the dilemma?
Answer
By both not confessing, both get to the cooperative solution and minimize time in prison.
By both confessing, both get to the noncooperative solution and both serve significant time in prison.
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.
The problem is that the spies should never have been caught; they should move to Rio.
Question 4
To trust a potential cooperator until the first defection and then never cooperate thereafter is
Answer
a dominant strategy
an irrational strategy
a grim trigger strategy
a non-cooperative finite game strategy
a subgame imperfect strategy
Question 5
When airlines post prices on an electronic bulletin board at 8:00 a.m. each morning, the decision-makers are engaged in
Answer
a single play game
a sequential game
an entry decision
a simultaneous game
an infinite repetition game
Question 6
The following are possible examples of price discrimination, EXCEPT:
Answer
prices in export markets are lower than for identical products in the domestic market.
senior citizens pay lower fares on public transportation than younger people at the same time.
a product sells at a higher price at location A than at location B, because transportation costs are higher from the factory to A.
subscription prices for a professional journal are higher when bought by a library than when bought by an individual.
Question 7
____ is a new product pricing strategy which results in a high initial product price. This price is reduced over time as demand at the higher price is satisfied.
Answer
Prestige pricing
Price lining
Skimming
Incremental pricing
Question 8
____ is the price at which an intermediate good or service is transferred from the selling to the buying division within the same firm.
Answer
Incremental price
Marginal price
Full-cost price
Transfer price
Question 9
Third-degree price discrimination exists whenever:
Answer
the seller knows exactly how much each potential customer is willing to pay and will charge accordingly.
different prices are charged by blocks of services.
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 10
To maximize profits, a monopolist that engages in price discrimination must allocate output in such a way as to make identical the ____ in all markets.
Answer
ratio of price to marginal cost
ratio of marginal cost to marginal utility
ratio of price to elasticity
marginal revenue
Question 11
Which of the following is not among the functions of contract?
Answer
to provide incentives for efficient reliance
to reduce transaction costs
to discourage the development of asymmetric information
to provide risk allocation mechanisms
Question 12
Non-redeployable durable assets that are dependent upon unique complementary and perfectly redeployable assets to achieve substantial value-added will typically be organized as
Answer
an export trading company
a spot market contract
a vertically integrated firm
an on-going relational contract
a joint stock company.
Question 13
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 ____.
Answer
reliance relationships
uncertainty
moral hazard
creative ingenuity
insurance reliance
Question 14
Which of the following are not approaches to resolving the principal-agent problem?
Answer
ex ante incentive alignment
deferred stock options
ex post governance mechanism
straight salary contracts
monitoring by independent outside directors
Question 15
Buying electricity off the freewheeling grid at one quarter 'til the hour for delivery on the hour illustrates:
Answer
relational contracts with distributors
vertical requirements contracts
spot market transactions
variable price agreements
Question 16
The antitrust laws regulate all of the following business decisions except ____.
Answer
collusion
mergers
monopolistic practices
price discrimination
wage levels
Question 17
The ____ is equal to the some of the squares of the market shares of all the firms in an industry.
Answer
market concentration ratio
Herfindahl-Hirschman index
correlation coefficient
standard deviation of concentration
Question 18
____ 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.
Answer
Pecuniary benefits and costs
Externalities
Intangibles
Monopoly costs and benefits
Question 19
The lower the barriers to entry and exit, the more nearly a market structure fits the ____ market model.
Answer
monopolistic competition
perfectly contestable
oligopoly
monopoly
Question 20
The Herfindahl-Hirschman index (also shortened to just the Herfindahl index) is a measure of ____.
Answer
market concentration
income distribution
technological progressiveness
price discrimination
Question 21
Any current outlay that is expected to yield a flow of benefits beyond one year in the future is:
Answer
a capital gain
a wealth maximizing factor
a capital expenditure
a cost of capital
a dividend reinvestment
Question 22
In order to help assure that all relevant factors will be considered, the capital-expenditure selection process should include the following steps except:
Answer
generating alternative capital-investment project proposals
estimating cash flows for the project proposals
reviewing the investment projects after they have been implemented
allocate manpower to the various divisions within the firm
Question 23
Cost-benefit analysis is the public sector counterpart to ____ used in private, profit-oriented firms.
Answer
ratio analysis
break-even analysis
capital budgeting techniques
economic forecasting
Question 24
The decision by the Municipal Transit Authority to either refurbish existing buses, buy new large buses, or to supplement the existing fleet with mini-buses is an example of:
Answer
independent projects
mutually exclusive projects
contingent projects
separable projects
Question 25
If the acceptance of Project A makes it impossible to accept Project B, these projects are:
Answer
contingent projects
complementary projects
mutually inclusive projects
mutually exclusive projects