Question 1
If an increase in output by a firm imposes uncompensated costs on other firms, these costs are referred to as
Question 2
In a two-player game, which of the following is a Nash equilibrium?
Question 3
Antilock brakes, airbags, and seatbelts increased the number of accidents While simultaneously decreasing the number of fatal accidents. Why does this happen?
Question 4
A movie theatre that charges a lower price for matinee: than for evening showings is engaging in
Question 5
A market is comprised of five firms and their market shares are 30%, 25%, 20%, 15%, and 10%. What is the Herfindahl index for the industry?
Question 6
A firm plans to raise $4 million by borrowing at an interest rate of 16% and to raise $1 million by issuing common stock The firm's stock has a beta coefficient of 2, the risk free interest rate is 6%, the average rate of return on stocks is 9%, and the
marginal tax rate is 25%. What is the firm's composite cost of capital?
Question 7
Which of these deals with asymmetry of information?
Question 8
An individual is indifferent between a certain payment of $20 and a game that will pay $50 or nothing with equal probabilities. The individual has a certainty equivalent coefficient of
Question 9
The prisoners' dilemma explains why
Question 10
Which of the following is a characteristic of both monopolistic competition and perfect competition?
Question 11
Identify the Nash equilibrium in the following game-
Company B
Bargain hard Comply
Company A Bargain hard (0.0) (10.-10)
Comply (-10.10) (5.5)
Question 12
A firm can borrow at an interest rate of 5%. Its marginal tax rate is 40%. What is its cost of debt?
Question 13
An investment opportunity will pay $10 with a 20% probability, $20 with a 40% probability, $30 with a 30% probability, and $40 with a 10% probability. What is the standard deviation of the investment?
Question 14
Investment A has an expected value of 5 and a standard deviation of 2. Investment B has an expected value of 10 and a standard deviation of 5. Using the coefficient of variation approach to comparing these two investments,
Question 15
The fully allocated cost of a product is $45- If the firm wants to use a markup of 30%= then it should charge a unit price of
Question 16
The restaurant industry has a market structure that comes closest to
Question 17
A firm that is considering one independent project should accept it if
Question 18
An investment opportunity will pay $50 with a 10% probability, $20 with a 40% probability, and will result in a loss of $20 with a 50% probability. What is the expected value of the investment?
Question 19
An individual has a certainty equivalent coefficient equal to 0.4. What is the most this individual would pay to play a game that pays $50 or $30 with equal probability?
Question 20
When several independent firms form a temporary network to take advantage of a short-term business opportunity, the result is called a
Question 21
One difference between the public interest theory and the economic theory of regulation is that the former
Question 22
Which of the following is always illegal in the U.S.?
Question 23
A strategy that is best regardless of What rival players do is called
Question 24
In repeated games, a strategy that involves attacking players that attack you and cooperating with players that cooperate with you is a
Question 25
Which of the following is a device that controls imports and generates government revenue?
Question 26
The fully allocated cost of a product is $10. If the price elasticity of demand for the product is -2, then the firm's optimal markup is
Question 27
The threat of new entrants would be higher under which of the following conditions?
Question 28
Which of the following is an example of the prisoners' dilemma?
Question 29
Which of the following made monopolization and restraint of trade illegal?
Question 30
Which of the following defines a zero-sum game?
Question 31
Suppose that the firms in an oligopolistic market engage in a price wm and, as a result, all firms earn lower profits. Game theory would describe this as
Question 32
In the short run, a monopolist will shut down if it is producing a level of output Where marginal revenue is equal to short-run marginal cost, but price is
Question 33
Which of the following is a condition required for the practice of price discrimination?
Question 34
The break-up of AT&T in 1984 separated the production of long distance and local telephone service and sacrificed benefits from
Question 35
There are two U.S. Locations where your company is currently the only producer of soda you currently make 40 in each location, but Pepsi is entering the markets. What decision should you make?
Pepsi
Low price High price
Your Company Low price (2.2) (10.-5)
High price (-20.30) (-10.40)
Question 36
A firm that uses profits earned in one market to sell a product or service below its average variable cost in another market is engaged in
Question 37
An individual must decide Whether or not to pursue a business opportunity. Ifhe does pursue the opportunity: then he will get a $20 profit if the business is successful and a $10 loss if the business fails. Apply the maximin and minimax regret
Question 38
The market demand curve for a perfectly competitive industry is QD=12-2P- The market supply curve is QS=3+P. The market will be in equilibrium if
Question 39
A monopolist faces a marginal revenue function of MR = 20 - Q. The monopolist's marginal cost is $15 at all levels of output. How many units of output should the firm produce in order to maximize profits?
Question 40
In game theory, a dominant strategy refers to a choice