7/21/2019 Part II Final Eco 550

http://slidepdf.com/reader/full/part-ii-final-eco-550 1/6

PART II

  Question 14 out of 4 points

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

Selected Answer:

a firm will follow a randomized strategy.

Correct Answer:

a firm will follow a randomized strategy.

  Question 24 out of 4 points

The Prisoner’s Dilemma involves two spies who are held in separate soundproof

rooms. But even if the two spies could communicate, what makes it difficult for them to

achieve the cooperative solution (both not confessing)?Answer

SelectedAnswer: The problem is that both spies have incentives to double cross each

other.

Correct Answer:

The problem is that both spies have incentives to double cross each

other.

  Question 34 out of 4 points

A key to analyzing subgame perfect equilibrium strategy in sequential games isAnswer

Selected Answer:

an explicit order of play for at least some participants

Correct Answer:

an explicit order of play for at least some participants

  Question 44 out of 4 points

An illustration of a non-credible commitment is the promiseAnswer

Selected Answer:

to restrain output to the quota assigned by a cartelCorrect Answer:

to restrain output to the quota assigned by a cartel

  Question 54 out of 4 points

If one-time gains from defection are always less than the discounted present value of an

infinite time stream of cooperative payoffs at some given discount rate, the decision-  

7/21/2019 Part II Final Eco 550

http://slidepdf.com/reader/full/part-ii-final-eco-550 2/6

makers have escapedAnswer

Selected Answer:

the Prisoner's dilemma

Correct Answer:

the Prisoner's dilemma

  Question 64 out of 4 points

Firms that have a cover charge for their customers and charge for each item they

 purchase as well are exhibitingAnswer

Selected Answer:

two-part price discrimination.

Correct Answer:

two-part price discrimination.

  Question 74 out of 4 points

Third-degree price discrimination exists whenever:Answer

Selected

Answer: the seller can separate markets by geography, income, age, etc., and chargedifferent prices to these different groups.

Correct

Answer: the seller can separate markets by geography, income, age, etc., and charge

different prices to these different groups.

  Question 84 out of 4 points

Which of the following pricing policies best identifies when a product should be

expanded, maintained, or discontinued?Answer

Selected Answer:

marginal-pricing policy

Correct Answer:

marginal-pricing policy

  Question 94 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:Answer

Selected Answer:

third-degree price discrimination

7/21/2019 Part II Final Eco 550

http://slidepdf.com/reader/full/part-ii-final-eco-550 3/6

Correct Answer:

third-degree price discrimination

  Question 104 out of 4 points

The following are possible examples of price discrimination, EXCEPT:Answer

SelectedAnswer: a product sells at a higher price at location A than at location B, because

transportation costs are higher from the factory to A.

CorrectAnswer: a product sells at a higher price at location A than at location B, because

transportation costs are higher from the factory to A.

  Question 114 out of 4 points

Which of the following are not approaches to resolving the principal-agent problem?Answer

Selected Answer:

straight salary contracts

Correct Answer:

straight salary contracts

  Question 124 out of 4 points

Vertical integration may be motivated by all of the following except:Answer

Selected Answer:

Economies of ever wider spans of managerial control

Correct Answer:

Economies of ever wider spans of managerial control

  Question 134 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 shouldAnswer

Selected Answer:

offer more collateral in exchange for lower interest charges

Correct Answer:

offer more collateral in exchange for lower interest charges

  Question 144 out of 4 points

Contracts are distinguished from tactical alliances by which of the followingcharacteristics:Answer

7/21/2019 Part II Final Eco 550

http://slidepdf.com/reader/full/part-ii-final-eco-550 4/6

Selected Answer:

require third-party enforcement

Correct Answer:

require third-party enforcement

 

Question 15 4 out of 4 points

To accomplish its purpose a linear profit-sharing contract mustAnswer

Selected Answer:

establish a separating equilibrium

Correct Answer:

establish a separating equilibrium

  Question 164 out of 4 points

The ____ is equal to the some of the squares of the market shares of all the firms in anindustry.Answer

Selected Answer:

Herfindahl-Hirschman index

Correct Answer:

Herfindahl-Hirschman index

  Question 170 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 ofAnswer

Selected Answer:

automobiles

Correct Answer:

transportation

  Question 184 out of 4 points

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

market model.Answer

Selected Answer:

 perfectly contestable

Correct Answer:

 perfectly contestable

  Question 194 out of 4 points

7/21/2019 Part II Final Eco 550

http://slidepdf.com/reader/full/part-ii-final-eco-550 5/6

 

 ____ yields the same results as the theory of perfect competition, but requiressubstantially fewer assumptions than the perfectly competitive model.Answer

Selected Answer:

The theory of contestable markets

Correct Answer:

The theory of contestable markets

  Question 204 out of 4 points

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

Selected Answer:

wage levels

Correct Answer:

wage levels

  Question 214 out of 4 points

In cost-effectiveness analysis, constant cost studies:Answer

Selected

Answer: attempt to specify the output which may be achieved from a number ofalternative programs, assuming all are funded at the same level

Correct

Answer: attempt to specify the output which may be achieved from a number of

alternative programs, assuming all are funded at the same level

  Question 224 out of 4 points

The social rate of discount is best approximated by:Answer

Selected Answer:

the opportunity cost of resources taken from the private sector

Correct Answer:

the opportunity cost of resources taken from the private sector

  Question 234 out of 4 points

In the constant-growth dividend valuation model, the required rate of return on commonstock (i.e., cost of equity capital) can be shown to be equal to the sum of the dividend

yield plus the ____.Answer

Selected Answer:

dividend growth rate

7/21/2019 Part II Final Eco 550

http://slidepdf.com/reader/full/part-ii-final-eco-550 6/6

Correct Answer:

dividend growth rate

  Question 244 out of 4 points

The ____ method assumes that the cash flows over the life of the project are reinvested

at the ____.Answer

Selected Answer:

net present value; firm's cost of capital

Correct Answer:

net present value; firm's cost of capital

  Question 254 out of 4 points

Which of the following should not be counted in a cost-benefit analysis?Answer

Selected Answer:

 pecuniary benefits

Correct Answer:

 pecuniary benefits

Tuesday, December 9, 2014 7:25:41 PM EST