Read the following mcqs and select the right answer:

1 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-makers have escaped

a. The Folk Theorem

b. The law of large numbers

c. The Prisoner's dilemma

d. The paradox of large numbers

e. The strategy of recusal

2. Non-cooperative sequential games can incorporate all the following features except

a. A single decision-maker in the endgame

b. No communication

c. Finite or infinite time periods

d. Third-party enforceable agreements

e. An explicit order of play

3. The following are possible examples of price discrimination, EXCEPT:

a. Prices in export markets are lower than for identical products in the domestic market.

b. Senior citizens pay lower fares on public transportation than younger people at the same time.

c. A product sells at a higher price at location A than at location B, because transportation costs are higher from the factory to A.

d. Subscription prices for a professional journal are higher when bought by a library than when bought by an individual.

4. 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. Mark-up pricing policy

5. Electricity pricing that varies in its billing expense throughout the day is called

a. Full pricing

b. Marginal cost pricing

c. Dynamic pricing

d. Variable pricing

e. Full cost pricing

6. 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.

a. Ratio of price to marginal cost

b. Ratio of marginal cost to marginal utility

c. Ratio of price to elasticity

d. Marginal revenue

7. 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.

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

8. 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

9. To accomplish its purpose a linear profit-sharing contract must

a. Induce the employee to moonlight

b. Communicate a code of conduct that will be monitored and enforced

c. Meet either the participation or the incentive compatibility constraint

d. Establish a separating equilibrium

e. Not realign incentives

10. 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

11. Buying electricity off the freewheeling grid at one quarter 'til the hour for delivery on the hour illustrates:

a. Relational contracts with distributors

b. Vertical requirements contracts

c. Spot market transactions

d. Variable price agreements

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

a. An export trading company

b. A spot market contract

c. A vertically integrated firm

d. An on-going relational contract

e. A joint stock company

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

a. Collusion

b. Mergers

c. Monopolistic practices

d. Price discrimination

e. Wage levels

14. 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

15. 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

16. 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

17. 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

18. Which of the following is (are) a basic principle(s) when estimating a project's cash flows?

a. Cash flows should be measured on a pre-tax basis

b. Cash flows should ignore depreciation since it is a non-cash charge

c. Only direct effects of a project should be included in the cash flow calculations

d. Cash flows should be measured on an incremental basis

19. Capital expenditures:

a. Are easily reversible

b. Are forms of operating expenditures?

c. Affect long-run future profitability

d. Involve only money, not machinery

20. Any current outlay that is expected to yield a flow of benefits beyond one year in the future is:

a. A capital gain

b. A wealth maximizing factor

c. A capital expenditure

d. A cost of capital

e. A dividend reinvestment

21. 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

Answer rating: 100% (QA)

1 c The Prisoners dilemma 2 d Thirdparty enforceable agreements 3 c A product sells ... View the full answer