1. When firms competing with each other in the same industry share efforts on activities such as R&D, technology standards, and product quantity improvements, their behavior is called:
a. Complementarity.
b. Symbiosis.
c. Coopetition.
d. Synergy.
2. In an industry characterized by a dominant firm and many smaller firms, the dominant firm select one:
a. Sets the quantity it will produce and lets the smaller firms determine quantities in response.
b. Sets its price based on the industry demand so as to retain its profits rate and market share.
c. Sets the price and quantity for the entire industry through collusion at trade group conferences.
d. Sets the industry quantity and communicates their respective shares to other firms through signaling.
3. The kinked demand curve model of oligopoly pricing suggests that prices select one:
The kinked demand curve model presumes that the firm determines its price behavior based on a prediction about its rivals’ reactions to potential price changes. This is one way to inject strategic considerations into the firm’s decisions( incomplete).
4. The major way in which oligopolies are believed to compete through is:
a. Price
b. Product differentiation
c. Advertising
d. Quantity
5. The prisoner’s dilemma is that both participants receive lower than optimal sales and profits due to the fear of :
a. Competitors responses to their decisions (the guy’s answer)
b. Being locked into a collusive agreement (our answer)
c. Having outmoded product facilities
d. Being locked into a particular quantity produced
6. The process of releasing a new product in phases with successively lower prices at each stage to capture early adaptor enthusiasm (and consumer surplus) is called the:
a. Strategic price cut model
b. Marketing skimming model
c. Changes in Market Demand.
d. The Learning Curve
7. Boosting the sales of related products … etc are the following except:
a. Bundling
b. Locking consumers into complementary products through technology or product design
c. Tying contract (the guy’s answer)
d. Zero-sum gaming (Nawwaf’s answer)
8. In game theory, a dominant strategy is one which:
a. Relies on first mover advantages
b. Is the best strategy regardless of competitors’ responses
c. Relies on second mover advantages
d. Correctly anticipate competitors’ responses
9. The economics term for attempting to make profits by taking advantages of circumstances such as monopoly power, patent ownership, lobbying etc. rather than producing value is:
a. Tying contract( the guy’s answer)
b. Not known ( I guess it’s bundling)
c. Rent seeking
d. Not known
10. Which of the following is an example of a internalizing a negative externality :
a. Patents
b. Charging polluters for clean-up costs
c. Copyrights
d. Government assistance to parties harmed by pollution
11. Which of the following is an example of a public good?
a. Nutrition guidelines on food packaging
b. Reducing water pollution
c. National defense
d. Buying nuclear waste
12. The major difference between expected utility and expected value is that the expected utility:
a. Does not use decision trees
b. Use the psychological value of winning or losing rather than the financial value of winning or losing (the guy’s answer)
c. Not known
d. Not known
13. If a stock broker conducts a client’s stock purchase in a manner that maximizes the broker commission rather than minimizing the client’s purchase price, this is an example of:
a. Adverse selection
b. Market failure due to imperfect information (the guy’s answer)
c. Moral hazard
d. Equity versus efficiency
14. If A is selling his used car to B who plans to buy and use the car, their negotiation will be made more difficult due to the existence of:
a. First mover advantage
b. Adverse selection
c. Asymmetric information
d. Reputation effects
15. Suppose firm seeks to increase its efficiency by having divisions organized into stages of production then each division “selling” the product to the division that handles subsequent stage in the production process. The amount of money associated with a unit of product delivered is called a/the:
16. Which of the following auction types are believed to deliver the highest price, and therefore, greatest consumer surplus capture:
a. English and Dutch auctions
b. Dutch and sealed-bid auctions
c. English and second-price auctions
d. English and sealed-bid auctions
17. The market for corporate control refers to:
a. The New York Stock Exchange
b. Pricing and contract when one firm is attempting to buy another firm
c. The market for chief executive officers (Nawwaf’s answer)
d. The use of outsourcing rather than production that is “in-house”
18. In negotiations, a “zone of agreement” refers to:
a. Conducting discussions in settings that don’t advantage either participant
b. Outcome that are acceptable to both buyers and sellers in the negotiations
c. Outcomes that benefit both participant and their agents in negotiations outcomes
d. Discussion that focus on the areas that all parties DO agree on rather than the areas that they DO NOT agree on
19. A procurement contract that sets high standards then rewards winners for the proportion to which they meet those high standards is called a/an :
a. Incentive contract
b. Re-negotiable contract
c. Cost-plus contract
d. Fixed price contract
20. If in an auction I discover that the bid I have placed is higher than the actual value of the item on which I bid, I fear that I will experience :
a. the revenue equivalence theorem
b. winner’s curse
c. the reservation price
d. value asymmetry