GCU ECN601 Week 7 Exam 2 Latest 2019 April Question # 00600626 Subject: Education Due on: 04/23/2019 Posted On: 04/23/2019 06:11 AM Tutorials: 1 Rating: 4.8/5
Week 7 Exam 2
Which of
the following would not be illegal according to the Robinson-Patman Act?
“Party
Packers” getting 10 cents off every pack of ribbon they buy after 1000
units
“Fred’s
Farms” offering 50 cents off a crate of strawberries to retailers to match
other suppliers with similar rates.
“Sam’s
Sandwiches” receiving 5 cents off per pound of cheese
All of the
above
2 The
optimal strategy in a Vickery auction is to:
Bid
aggressively.
Bid above
your value since you would be paying the second highest price.
Bid exactly
your value.
Bid below
your value.
3 In a
principal-agent relationship
The
principal wants the agent to act on her own behalf.
The agent
wants the principal to act on his behalf.
The
principal wants the agent to act on the behalf of others.
The agent
wants the principal to act on the behalf of others.
4 Compared
to simple pricing, price discrimination leads to:
Loss in
profits.
Increased
revenue.
Consumer
surplus being converted to producer surplus.
Both B and
C.
5 The
pricing rule MR=MC holds for:
All firms
Single
product firms
Multiple
product firms
None of the
above
6 Which of
the following is a violation of antitrust laws?
A firm
discussing/fixing price with its competitors.
Making
arrangements to stay out each other’s markets.
Merging
with the competitor to eliminate competition.
All of the
above
7 Nash
equilibrium is:
Where one
player maximizes payoff and the other does not.
When one
player’s strategy is the best response to the other player’s strategy.
Where the
outcome is always efficient.
Difficult
to determine.
8 What is
it called when each additional worker hired contributes successively smaller
amounts of output?
Diminishing
profitability
Diminishing
total product
Diminishing
marginal product
None of the
above
9 If the VP
of a product launch thinks that a particular product would be profitable, but
ended up launching an unprofitable product, this will be a:
Type I
error
Type II
error
Neither
Type I nor Type II error
False positive
10 You
experiment by offering free warranties for your product in market A but not in
market B. Sales in Market A rise from 240 to 360 units per week while sales in
Market B rise from 410 to 430. The difference-in-difference estimate of the
effect of the free warranty is:
80 units
100 units
120 units
140 units
11 Indirect
price discrimination differs from direct price discrimination because:
In indirect
price discrimination, high value consumers can sometimes still get the low
price
In direct
price discrimination, firms do not have to worry about cannibalizing.
Direct
price discrimination encourages rivals to enter but indirect discrimination
does not.
There is no
difference between the two.
12 For
jointly owned substitute products, cannibalization leads to MR______MC.
Higher than
Lower than
Equals
None of the
above
13 Half of
all your potential customers would pay $10 for your product, but the other half
would only pay $8. You cannot tell them apart. Your marginal costs are $4. If
you set the price at $8, the expected profit is:
$3
$4
$5
$6
14 For
direct price discrimination to work effectively
The
low-valued customers should not be able to engage in arbitrage.
You need to
charge the same price to the different groups.
Both groups
should have the same elasticity of demand.
None of the
above
15 For a
production function with a diminishing, but positive, marginal product of
labor:
Output
increases at an increasing rate as more workers are employed
Output
increases at a decreasing rate as more workers are employed.
Output
declines as more workers are employed.
The effects
on marginal product are unknown.
16 Which of
the following is true?
Incentive
compensation imposes no risks on the agents and thus should not affect their
compensation.
Incentive
compensation imposes risk on the agent but need not be compensated for.
Incentive
compensation imposes risk on the agent for which the agent should be
compensated
Incentive
compensation is a bad idea
17 Jim has
a better chance of having his offer accepted, since the seller does not have
any outside offers.
Jim has a
better chance of having his offer accepted, since the seller does not have any
outside offers.
Jim has
lower chances of having his offer accepted, since the seller has more outside
offers.
The
disagreement value for the seller has increased
Only A and
C
18 The
general rule to increase profits when two close complementary brands are
jointly owned is:
Increase
prices for both brands.
Decrease
prices for both brands.
Increase
prices on one brand, and decrease prices it for the other.
Increase
prices on one brand, but keeping the prices of the second brand constant.
19 Which of
the following is a screen against adverse selection?
Insurance
companies require homeowners to have smoke detectors
Rearview
cameras in cars.
Installing
engine monitors to track driving habits of the insured.
Prospective
secretaries must take a typing test before being hired.
20 Use the
table provided to answer the following question. If the groups are of equal
size and the firm can only set one price, how should the firm price the high-end
wok?
Price low and
sell to both groups.
Price high
and sell only to the professional chefs.
Price low
and sell only to the home users.
All of the
above
21 An HVAC
company is selling heating and cooling equipment. It has separate sales and
marketing units. The marketing unit would want to:
Price
aggressively to ensure sales are made.
Price less
aggressively to ensure that profitable sales are made.
Price at
cost to maximize sales.
None of the
above
22 Moral
hazard implies that:
Insured
individuals exercise less care because they have less incentive to do so.
Insured
individuals exercise more care because they have less incentive to do so.
Insured
individuals exercise more care because they have more incentive to do so.
Insured
individuals exercise less care because they have more incentive to do so.
23 Which of
the following is not an example of risk aversion?
You lock
your garage when you have expensive workshop tools.
You are
more careful when you buy a more expensive car.
Individuals
tend to gamble more with their money when the future is uncertain.
You only go
swimming when the lifeguard is on duty.
24 The
tradeoff between ____ and _____ is represented as the labor supply curve.
Work and
wages
Work and
leisure
Wages and
productivity
Technology
and wages
25 Viceroy
Vacations is deciding on how to price its vacation packages. Which of the
following strategies would you suggest?
Price the
flight, hotel, and car separately.
Advertise
them as an all-inclusive vacations.
Give them
away as free vacations to everyone.
Close down
your company. No one goes on vacations anymore.
26 Use the
table provided to answer the following question. If the firm decides to only
offer the high-end wok, what is the highest price it can charge the chefs?
$70
$80
$90
$100
27 In a
two-person repeated game, a tit-for-tat strategy is:
When each
player pursues his or her own self-interest without any cooperation.
When
players start off as noncooperative and then cooperate when one or both players
show interest in colluding.
When
players start by cooperating and then mimic the other player’s last move.
When
neither player defects.
28 Three
possibilities are equally likely and have payoffs of $6, $12, and $24. The
expected value is:
$4
$14
$6
$7
29 Tom
wants to avoid any accidents on the work floor of his factory. If an accident
does occur, it would cost him $500,000 in damages. Installing safety equipment
would decrease the probability of an accident occurring from 20% to 10%.
However, the equipment costs $20,000 to install. Would Tom install the safety
equipment?
Yes,
because it costs him less than it is worth.
Yes,
because it costs him more than it is worth.
No, because
it costs him more than it is worth.
No, because
it costs him less than it is worth.
30 Tom
wants to avoid any accidents on the work floor of his factory. If an accident
does occur, it would cost him $500,000 in damages. Installing safety equipment
would decrease the probability of an accident occurring from 20% to 10%.
However, the equipment costs $20,000 to install. What is his expected loss
after installing the safety equipment?
$20,000
$50,000
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