Question

Please refer to Individual Problem 20-5 in Chapter 20. If the client pays the cost for Form A for all forms processed, what is the average gain or loss earned across all forms processed? A. Lose $0.10 per form B. Break even C. Gain $0.10 per form D. Gain $0.15 per form

Which of the following actions can be an example of a signal designed to reduce the impact of asymmetric information? A. A money-back guarantee B. Students pursue graduate training C. Students take an unpaid internship D. All of the above

In a situation subject to asymmetric information, which party should use the screening techniques? A. Less informed party B. More informed party C. We do not have enough information to answer this question D. Neither party should use screens

Which of the following statements is NOT true? A. Oral auctions are also second-price auctions B. English auctions are also known as oral auctions C. Common value auctions are subject to the winners curse D. The outcomes from Vickrey auctions are identical to first-price sealed bid auctions

Which type of randomness can be fully described by a probability distribution? A. Risk B. Uncertainty C. Both of the above D. None of the above

Please refer to the two-player simultaneous game in Multiple Choice question 3 in Chapter 16. How many pure strategy Nash equilibria does this game have? A. 0 B. 1 C. 2 D. 3

Please refer to the game associated with Multiple Choice question 8 in Chapter 15. If the low price / low price payoffs for both players are 30 (instead of 0), is this game a prisoners' dilemma? A. No B. Yes

Which of the following statements is true? A. Players take actions that maximize their joint profits under a Nash equilibrium B. There may be no unique Nash equilibrium to a two-player simultaneous game. C. One of the players must have a first-mover advantage in a two-player sequential game D. Nash equilibria are only defined for repeated games Metering is a type of direct price discrimination. True False

Which of the following claims is NOT true? A. Bundling is profitable if the willingness to pay for the bundle is more homogeneous than the willingness to pay for the bundle components B. Volume discounts are not a form of price discrimination C. If arbitrage between customers is possible, the seller should offer uniform prices D. Price discrimination is feasible if the costs of arbitrage exceed the difference in prices charged to the different customers

In general, women's clothing items (e.g., running shoes) have higher prices than comparable products designed for men due to price discrimination. How do the clothing sellers prevent resale in these markets? A. Price discrimination is not possible in clothing markets B. State consumer protection laws prohibit selling goods intended for one group to members of the other group C. The clothing products are differentiated by styling or design features D. The retailers are prohibited from selling products intended for one group to members of the other group

The remaining consumer surplus is zero under a successful first-degree price discrimination scheme. True False

Suppose the marginal cost to produce Apple iPhones is $400 per phone. Initially, the elasticity of demand for the iPhone is -2 when the product has no close substitutes. As other smart phones enter the market place, the elasticity of demand for iPhones changes to -3. If Apple is setting prices to maximize profits, how much should the iPhone price decline in response to the entry by competing phones? A. $200 B. $300 C. $400 D. $600

Answer 1