Eco 550 new 2016 midterm part 2

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1.

When there is an Equilibrium (or a Nash Equilibrium), we expect that: 2.

In adopting mixed Nash equilibrium strategy, a player is attempting to 3.

Credible promises and hostage mechanisms can support a continuous stream of cooperative exchanges except when 4.

A dominant strategy differs from a Nash equilibrium strategy in that 5.

Cooperation in repeated prisoner's dilemma situations seems to be enhanced by all of the following except 6.

Electricity pricing that varies in its billing expense throughout the day is called 7.

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: 8.

Which of the following pricing policies best identifies when a product should be expanded, maintained, or discontinued?

9.

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.

10. ____ is the price at which an intermediate good or service is transferred from the selling to the buying division within the same firm.

11.

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 ____.

12.

When borrowers who do not intend to repay are able to hide their bad credit histories, a lender's well-intentioned borrowers should 13.

To accomplish its purpose a linear profit-sharing contract must 14.

To accomplish its purpose a linear profit-sharing contract must 15.

When someone contracts to do a task but fails to put full effort into the performance of an agreement, yet the lack of effort is not independently verifiable, this lack of effort constitutes a 16.

The Herfindahl-Hirschman index (also shortened to just the Herfindahl index) is a measure of ____.

17.

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

18.

The lower the barriers to entry and exit, the more nearly a market structure fits the ____ market model.

19. ____ yields the same results as the theory of perfect competition, but requires substantially fewer assumptions than the perfectly competitive model.

20. ____ 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.

21.

Cost-benefit analysis is the public sector counterpart to ____ used in private, profit-oriented firms.

22.

The weights used in calculating the firm's weighted-average cost of capital are equal to the proportion of debt and equity ____.

23.

In order to help assure that all relevant factors will be considered, the capital-expenditure selection process should include the following steps except: 24.

The social rate of discount is best approximated by: 25.

In the constant-growth dividend valuation model, the required rate of return on common stock (i.e., cost of equity capital) can be shown to be equal to the sum of the dividend yield plus the ____.