Question 1

5 out of 5 points

In the linear breakeven model, the difference between selling price per unit and variable
cost per unit is referred to as:
Answer
Selected Answer:
contribution margin per unit
Correct Answer:
contribution margin per unit

Question 2
0 out of 5 points

A ____ total cost function implies that marginal costs ____ as output is increased.
Answer
Selected Answer:
linear; increase linearly
Correct Answer:
linear; are constant

Question 3
5 out of 5 points

The short-run cost function is:

Answer
Selected
Answer:
Correct
Answer:

relevant to decisions in which one or more inputs to the production

process are fixed
relevant to decisions in which one or more inputs to the production
process are fixed

 Question 4
5 out of 5 points

In a study of banking by asset size over time, we can find which asset sizes are tending
to become more prominent. The size that is becoming more predominant is presumed to
be least cost. This is called:
Answer
Selected Answer:
survivorship analysis.
Correct Answer:
survivorship analysis.

Question 5
0 out of 5 points

In determining the shape of the cost-output relationship only ____ depreciation is

relevant.
Answer
Selected Answer:
time
Correct Answer:
usage

Question 6
5 out of 5 points

The main difference between perfect competition and monopolistic competition is:
Answer
Selected Answer:
The degree of product differentiation
Correct Answer:
The degree of product differentiation

Question 7

5 out of 5 points

An "experience good" is one that:

Answer
Selected Answer:
Has undetectable quality when purchased
Correct Answer:
Has undetectable quality when purchased

Question 8
0 out of 5 points

All of the following are true for both competition and monopolistic competition in the
long run, except one of them. Which is it?
Answer
Selected Answer:
The barriers to entry and exit are relatively easy
Correct Answer:
P = MC

Question 9
5 out of 5 points

If price exceeds average costs under pure competition, ____ firms will enter the
industry, supply will ____, and price will be driven ____.
Answer
Selected Answer:
more; increase; down
Correct Answer:
more; increase; down

Question 10
0 out of 5 points

In the long-run, firms in a monopolistically competitive industry will

Answer
Selected Answer:
earn substantial economic profits
Correct Answer:
tend to just cover costs, including normal profits

Question 11
5 out of 5 points

Regulatory agencies engage in all of the following activities except _______.

Answer
Selected Answer:
setting federal and state income tax rates on regulated firms
Correct Answer:
setting federal and state income tax rates on regulated firms

Question 12
0 out of 5 points

In natural monopoly, AC continuously declines due to economies in distribution or in

production, which tends to found in industries which face increasing returns to scale. If
price were set equal to marginal cost, then:
Answer
Selected Answer:
price would exceed average cost.
Correct Answer:
price would equal average cost.

Question 13
0 out of 5 points

The practice by telephone companies of charging lower long-distance rates at night than
during the day is an example of:
Answer
Selected Answer:
first-degree price discrimination
Correct Answer:
peak-load pricing

Question 14
0 out of 5 points

Of the following, which is not

an economic rationale for public utility regulation?
Answer
Selected Answer:
protection of consumers from price discrimination
Correct Answer:
constant cost industry

Question 15
0 out of 5 points

When the cross elasticity of demand between one product and all other products is low,
one is generally referring to a(n) ____ situation.
Answer
Selected Answer:
oligopoly
Correct Answer:
monopoly

Question 16
0 out of 5 points

If a cartel seeks to maximize profits, the market share (or quota) for each firm should be
set at a level such that the ____ of all firms is identical.
Answer
Selected Answer:
marginal profit
Correct Answer:
marginal cost

Question 17
5 out of 5 points

Which of the following is an example of an oligopolistic market structure?

Answer
Selected Answer:
air transport industry
Correct Answer:
air transport industry

Question 18
0 out of 5 points

Some market conditions make cartels MORE likely to succeed in collusion. Which of
the following will make collusion more successful?
Answer
Selected Answer:
The firms are all about the same size
Correct Answer:
The orders are small and frequent

Question 19
0 out of 5 points

In a kinked demand market, whenever one firm decides to lower its price,
Answer

Selected
Answer:

one half of the firms follow and one half of the firms don't follow the
price cut.

Correct
Answer:

other firms will automatically follow.

Question 20
5 out of 5 points

Barometric price leadership exists when

Answer
Selected
Answer:
Correct
Answer:

one firm in the industry initiates a price change and the others follow it
as a signal of changes in cost or demand in the industry.
one firm in the industry initiates a price change and the others follow it
as a signal of changes in cost or demand in the industry.

Question 21
5 out of 5 points

The difference between cooperative and non-cooperative games is

Answer
Selected Answer:
cooperative games allow side payments to support collusion
Correct Answer:
cooperative games allow side payments to support collusion

Question 22
5 out of 5 points

Credible promises and hostage mechanisms can support a continuous stream of

cooperative exchanges except when
Answer

Selected Answer:
the hostage can be revoked for just causes
Correct Answer:
the hostage can be revoked for just causes

Question 23
0 out of 5 points

Credibility in threats and commitments in sequential games is based on

Answer
Selected Answer:
explicit communications with competitors
Correct Answer:
analyzing best reply responses

Question 24
0 out of 5 points

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

Answer
Selected Answer:
information sets that are known with certainty
Correct Answer:
an explicit order of play for at least some participants

Question 25
0 out of 5 points

Non-cooperative sequential games can incorporate all the following features except
Answer
Selected Answer:
an explicit order of play
Correct Answer:

third-party enforceable agreements

Question 26
0 out of 5 points

Which of the statements about price discrimination is (are) false?

Answer
Selected
Answer:
Correct
Answer:

There must be differences in the elasticity of demand from one

segment to another.
Public utilities practice first-degree price discrimination.

Question 27
0 out of 5 points

Third-degree price discrimination exists whenever:

Answer
Selected
Answer:
Correct
Answer:

the seller knows exactly how much each potential customer is willing to
pay and will charge accordingly.
the seller can separate markets by geography, income, age, etc., and
charge different prices to these different groups.

Question 28
0 out of 5 points

Vacation tours to Europe invariably package visits to disparate regions: cities,

mountains, and the seaside. Bundling, a type of second degree price discrimination, is
most profitable when:
Answer
Selected
Answer:

a preference for cities is always higher than preferences for mountain

vistas.
Correct
Answer:

the preference rankings of vacationers travelling together are

negatively correlated.

Question 29
5 out of 5 points

____ 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
Selected Answer:
Skimming
Correct Answer:
Skimming

Question 30
5 out of 5 points

The optimal mark-up is: m = -1/ (E+1). When the mark-up on cookware equals 50%,
then demand elasticity (E) for cookware is:
Answer
Selected Answer:
-2
Correct Answer:
-2

Question 31
5 out of 5 points

When borrowers who do not intend to repay are able to hide their bad credit histories, a
lender's well-intentioned borrowers should
Answer
Selected Answer:

offer more collateral in exchange for lower interest charges

Correct Answer:
offer more collateral in exchange for lower interest charges

Question 32
0 out of 5 points

Agency problems appear in many settings within a firm. All of the

following are examples, except which is NOT a good example of this
problem?
Answer
Selected
Answer:
Correct
Answer:

Diversified stockholders are more enthusiastic on accepting business

risks than are firm managers.
Firm managers receive cash bonuses based on the performance of the
firm.

Question 33
5 out of 5 points

Buying electricity off the freewheeling grid at one quarter 'til the hour for delivery on
the hour illustrates:
Answer
Selected Answer:
spot market transactions
Correct Answer:
spot market transactions

Question 34
5 out of 5 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 35
5 out of 5 points

The Herfindahl-Hirschman index (also shortened to just the Herfindahl index) is a

measure of ____.
Answer
Selected Answer:
market concentration
Correct Answer:
market concentration

Question 36
5 out of 5 points

____ 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
Selected Answer:
Externalities
Correct Answer:
Externalities
Sunday, March 17, 2013 5:46:08 PM EDT
OK

Question 1

5 out of 5 points

In the linear breakeven model, the difference between selling price per unit and variable
cost per unit is referred to as:
Answer
Selected Answer:
contribution margin per unit
Correct Answer:
contribution margin per unit

Question 2
5 out of 5 points

In a study of banking by asset size over time, we can find which asset sizes are tending
to become more prominent. The size that is becoming more predominant is presumed to
be least cost. This is called:
Answer
Selected Answer:
survivorship analysis.
Correct Answer:
survivorship analysis.

Question 3
5 out of 5 points

George Webb Restaurant collects on the average $5 per customer at its breakfast &
lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is
$40,000. If George Webb wants to make a profit of $20,000 per year at the diner, it will
have to serve__________ customers per year.
Answer
Selected Answer:
30,000 customers
Correct Answer:
30,000 customers

 Question 4
5 out of 5 points

Break-even analysis usually assumes all of the following except:

Answer
Selected
Answer:

in the short run, there is no distinction between variable and fixed

costs.

Correct Answer:
in the short run, there is no distinction between variable and fixed
costs.

Question 5
5 out of 5 points

The short-run cost function is:

Answer
Selected
Answer:
Correct
Answer:

relevant to decisions in which one or more inputs to the production

process are fixed
relevant to decisions in which one or more inputs to the production
process are fixed

Question 6
5 out of 5 points

In the long-run, firms in a monopolistically competitive industry will

Answer
Selected Answer:
tend to just cover costs, including normal profits
Correct Answer:
tend to just cover costs, including normal profits

 Question 7
0 out of 5 points

Under asymmetric information,

Answer
Selected Answer:
you always get cheated
Correct Answer:
at best you get what you pay for

Question 8
5 out of 5 points

The price for used cars is well below the price of new cars of the same general quality.
This is an example of:
Answer
Selected Answer:
A Lemon's Market
Correct Answer:
A Lemon's Market

Question 9
5 out of 5 points

The main difference between perfect competition and monopolistic competition is:
Answer
Selected Answer:
The degree of product differentiation
Correct Answer:
The degree of product differentiation

Question 10
5 out of 5 points

If price exceeds average costs under pure competition, ____ firms will enter the
industry, supply will ____, and price will be driven ____.
Answer
Selected Answer:
more; increase; down
Correct Answer:
more; increase; down

Question 11
0 out of 5 points

Declining cost industries

Answer
Selected Answer:
have diseconomies of scale.
Correct Answer:
have marginal cost curves below their average cost curve.

Question 12
5 out of 5 points

Of the following, which is not

an economic rationale for public utility regulation?
Answer
Selected Answer:
constant cost industry
Correct Answer:
constant cost industry

Question 13
5 out of 5 points

____ as practiced by public utilities is designed to encourage greater usage and therefore
spread the fixed costs of the utility's plant over a larger number of units of output.
Answer
Selected Answer:
Block pricing
Correct Answer:
Block pricing

Question 14
5 out of 5 points

Regulatory agencies engage in all of the following activities except _______.

Answer
Selected Answer:
setting federal and state income tax rates on regulated firms
Correct Answer:
setting federal and state income tax rates on regulated firms

Question 15
5 out of 5 points

The practice by telephone companies of charging lower long-distance rates at night than
during the day is an example of:
Answer
Selected Answer:
peak-load pricing
Correct Answer:
peak-load pricing

Question 16
5 out of 5 points

"Conscious parallelism of action" among oligopolistic firms is an example of ____.

Answer

Selected Answer:
informal, or tacit, cooperation
Correct Answer:
informal, or tacit, cooperation

Question 17
5 out of 5 points

A cartel is a situation where firms in the industry

Answer
Selected Answer:
have an agreement to restrict output.
Correct Answer:
have an agreement to restrict output.

Question 18
5 out of 5 points

Even ideal cartels tend to be unstable because

Answer
Selected
Answer:

firms can benefit by secretly selling more than they promised the
other firms

Correct Answer:
firms can benefit by secretly selling more than they promised the
other firms

Question 19
5 out of 5 points

In a kinked demand market, whenever one firm decides to lower its price,
Answer
Selected Answer:
other firms will automatically follow.

Correct Answer:
other firms will automatically follow.

Question 20
5 out of 5 points

The existence of a kinked demand curve under oligopoly conditions may result in
Answer
Selected Answer:
price rigidity
Correct Answer:
price rigidity

Question 21
5 out of 5 points

The starting point of many methods for predicting equilibrium strategy in sequential
games is
Answer
Selected Answer:
endgame analysis
Correct Answer:
endgame analysis

Question 22
5 out of 5 points

Essential components of a game include all of the following except:

Answer
Selected Answer:
cooperation
Correct Answer:
cooperation

 Question 23
5 out of 5 points

Credibility in threats and commitments in sequential games is based on

Answer
Selected Answer:
analyzing best reply responses
Correct Answer:
analyzing best reply responses

Question 24
5 out of 5 points

In a game, a dominated strategy is one where:

Answer
Selected Answer:
It is always the best strategy
Correct Answer:
It is always the best strategy

Question 25
5 out of 5 points

Credible promises and hostage mechanisms can support a continuous stream of

cooperative exchanges except when
Answer
Selected Answer:
the hostage can be revoked for just causes
Correct Answer:
the hostage can be revoked for just causes

Question 26
5 out of 5 points

Vacation tours to Europe invariably package visits to disparate regions: cities,

mountains, and the seaside. Bundling, a type of second degree price discrimination, is
most profitable when:
Answer
Selected
Answer:
Correct
Answer:

the preference rankings of vacationers travelling together are

negatively correlated.
the preference rankings of vacationers travelling together are
negatively correlated.

Question 27
5 out of 5 points

____ is the price at which an intermediate good or service is transferred from the selling
to the buying division within the same firm.
Answer
Selected Answer:
Transfer price
Correct Answer:
Transfer price

Question 28
5 out of 5 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
Correct Answer:
third-degree price discrimination

Question 29

5 out of 5 points

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
Selected Answer:
marginal revenue
Correct Answer:
marginal revenue

Question 30
5 out of 5 points

Firms that have a cover charge for their customers and charge for each item they
purchase as well are exhibiting
Answer
Selected Answer:
two-part price discrimination.
Correct Answer:
two-part price discrimination.

Question 31
5 out of 5 points

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
Selected Answer:
a vertically integrated firm
Correct Answer:
a vertically integrated firm

Question 32

5 out of 5 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 33
0 out of 5 points

Governance mechanisms are designed

Answer
Selected Answer:
to enhance the flexibility of restrictive covenants
Correct Answer:
to resolve post-contractual opportunism

Question 34
5 out of 5 points

Agency problems appear in many settings within a firm. All of the

following are examples, except which is NOT a good example of this
problem?
Answer
Selected
Answer:

Firm managers receive cash bonuses based on the performance of

the firm.

Correct Answer:
Firm managers receive cash bonuses based on the performance of
the firm.

Question 35

5 out of 5 points

____ 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
Selected Answer:
Externalities
Correct Answer:
Externalities

Question 36
5 out of 5 points

The antitrust laws regulate all of the following business decisions except ____.
Answer
Selected Answer:
wage levels
Correct Answer:
wage levels
Sunday, March 17, 2013 8:09:01 PM EDT