Practice - Assignment Essays

question

A risk averse individual

answer

values a lottery at less than its expected value

question

Firms maintain their completive edge by

answer

All of the above

question

Which of the following is an example of price discrimination?

answer

All of the above

question

The practice of buying a firm's good in one market at a low price and selling it in another market for a higher price in order to profit from the price difference is known as

answer

Arbitrage

question

A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, the transaction will generate:

answer

$6,000 worth of buyer surplus and $4,000 of seller surplus

question

If the bidders at a first-price auction have true values of $78, $72, $66, and $65, the item will sell for

answer

$78

question

If the firm hires 5 workers, the average cost equals

answer

$1,000

question

An rational, optimizing, self interested consumer would consume up to the point where

answer

the consumer surplus from the last unit is zero

question

US law was recently changed so that some airplane manufacturers are immune from liability from accidents involving their decades old aircraft, laying all the responsibility on the pilots. As a result

answer

accident rates fell due to less moral hazard

question

You can either invest in project A or B. Project A could have a value of $100 with a probability of 0.1 or a value of $75 with probability 0.9. Project B could have a value of $110 with probability 0.2 or a value of $70 with a probability of 0.8. Which project should you invest in?

answer

Project B

question

An example of moral hazard is

answer

people drive less safely with more airbags than without

question

An increase in demand could arise from which of the following factors

answer

an increase in income

question

When interest rates go down, people are

answer

more likely to borrow

question

A sudden fall in the market demand in a competitive industry leads to

answer

All of the above

question

Rivalry among firms would tend to be high if

answer

Firms are located close to one another

question

Which of the following factors would shift the supply curve for ice cream to the right?

answer

Both A&C

question

All of these could be sources of economies of scale except

answer

A bottleneck procedure

question

If quantity demanded for rice falls by 4% when price increases 8%, we know that the absolute value of the own-price elasticity of rice is:

answer

0.5

question

Jim is planning on attending a football game. He spent $40 on the ticket. He will have to take the day off losing 8 hours of work. His hourly wage is $10. He estimates it will cost him around $20 for gas and parking at the game. Jim's total economic cost of attending the game equals

answer

$140

question

What are economies of scope?

answer

the cost of producing two products jointly by one firm is lesser than the cost of producing them separately

question

Use the following case from questions 50-54
Two ice cream trucks A&B are playing a simultaneous pricing game. If one of them prices low, he gets all the customers, a payoff of 12, while other gets zero. If both price high they each get a payoff of 6 and if both price low, they get a payoff of 5.
Does the Nash equilibrium yield maximum profit?

answer

No, because they could do better by pricing high

question

If the Chinese Yuan devalues against the US dollar, then

answer

The US importers would benefit while the Chinese importers would be hurt

question

Which one of the following is a way to get out of a repeated Prisoner's Dilemma Nash Equilibrium?

answer

Be forgiving

question

To keep employees from shirking, invest in greater monitoring

answer

when employees fail to respond to incentive contracts

question

A firm will shut down in the short-run if

answer

P<AVC

question

Use the following to answer questions 81-84
Consider the following information for a simultaneous move game: Two discount stores (megastore and superstore) are interested in expanding their market share through advertising. The table below depicts the strategic outcomes (profits) of both stores with and without advertising.

What is the equilibrium payoff for these stores

answer

Megastore $95 and Superstore $80

question

Holding other things constant, if the Japanese Yen, depreciates, it makes the Japanese products

answer

More attractive to US customers

question

Which of the following is more likely to be able to command a higher price for its products

answer

Both A&C

question

Use the following setup for questions 44-45
A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000. The firm's current fixed costs are $9,000 and current marginal cost are $15. The firm currently charges $18 per unit.
The current break-even quantity is

answer

3000

question

A firm in a _________ faces a _________ demand curve

answer

perfectly competitive market; perfectly elastic

question

In the long run , in a competitive industry

answer

All of the above

question

A competitive wage differntial is

answer

Only a and b

question

Economists love auctions because

answer

They create efficiency by alotting the item to the highest value bidder

question

If AVC=$5 and AFC=15, then AC=

answer

$20

question

In sequential games,

answer

Players take turns and observe their rivals choices before they make their choices

question

Average costs curves initially fall

answer

Due to declining average fixed costs

question

In the simultaneous move labor negotiation game:

answer

Both parties bargain hard in the Nash equilibrium

question

A supply curve slopes upwards because

answer

The higher the price, the higher that the sellers are willing to supply

question

One lesson of business

answer

moving assets

question

if gdp

answer

1 of 40

question

A risk averse individual

answer

values a lottery at less than its expected value

question

Firms maintain their completive edge by

answer

All of the above

question

Which of the following is an example of price discrimination?

answer

All of the above

question

The practice of buying a firm's good in one market at a low price and selling it in another market for a higher price in order to profit from the price difference is known as

answer

Arbitrage

question

A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, the transaction will generate:

answer

$6,000 worth of buyer surplus and $4,000 of seller surplus

question

If the bidders at a first-price auction have true values of $78, $72, $66, and $65, the item will sell for

answer

$78

question

If the firm hires 5 workers, the average cost equals

answer

$1,000

question

An rational, optimizing, self interested consumer would consume up to the point where

answer

the consumer surplus from the last unit is zero

question

US law was recently changed so that some airplane manufacturers are immune from liability from accidents involving their decades old aircraft, laying all the responsibility on the pilots. As a result

answer

accident rates fell due to less moral hazard

question

answer

Project B

question

An example of moral hazard is

answer

people drive less safely with more airbags than without

question

An increase in demand could arise from which of the following factors

answer

an increase in income

question

When interest rates go down, people are

answer

more likely to borrow

question

A sudden fall in the market demand in a competitive industry leads to

answer

All of the above

question

Rivalry among firms would tend to be high if

answer

Firms are located close to one another

question

Which of the following factors would shift the supply curve for ice cream to the right?

answer

Both A&C

question

All of these could be sources of economies of scale except

answer

A bottleneck procedure

question

If quantity demanded for rice falls by 4% when price increases 8%, we know that the absolute value of the own-price elasticity of rice is:

answer

0.5

question

answer

$140

question

What are economies of scope?

answer

the cost of producing two products jointly by one firm is lesser than the cost of producing them separately

question

answer

No, because they could do better by pricing high

question

If the Chinese Yuan devalues against the US dollar, then

answer

The US importers would benefit while the Chinese importers would be hurt

question

Which one of the following is a way to get out of a repeated Prisoner's Dilemma Nash Equilibrium?

answer

Be forgiving

question

To keep employees from shirking, invest in greater monitoring

answer

when employees fail to respond to incentive contracts

question

A firm will shut down in the short-run if

answer

P<AVC

question

answer

Megastore $95 and Superstore $80

question

Holding other things constant, if the Japanese Yen, depreciates, it makes the Japanese products

answer

More attractive to US customers

question

Which of the following is more likely to be able to command a higher price for its products

answer

Both A&C

question

answer

3000

question

A firm in a _________ faces a _________ demand curve

answer

perfectly competitive market; perfectly elastic

question

In the long run , in a competitive industry

answer

All of the above

question

A competitive wage differntial is

answer

Only a and b

question

Economists love auctions because

answer

They create efficiency by alotting the item to the highest value bidder

question

If AVC=$5 and AFC=15, then AC=

answer

$20

question

In sequential games,

answer

Players take turns and observe their rivals choices before they make their choices

question

Average costs curves initially fall

answer

Due to declining average fixed costs

question

In the simultaneous move labor negotiation game:

answer

Both parties bargain hard in the Nash equilibrium

question

A supply curve slopes upwards because

answer

The higher the price, the higher that the sellers are willing to supply

question

One lesson of business

answer

moving assets

question

if gdp

answer

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