Which of the following serves as a voluntary signal of quality?
a) Warrantee
b) Independent reviews
c) Truth in Advertising
d) Free product financing
e) Public claims
In what special situation might the law of demand not hold?
a) In a perfectly competitive market
b) When there is a high price elasticity of demand
c) When MR=MC
d) At the Nash Equilibrium
e) If high prices confer prestige
What type of good is one whose quality can be assessed only after the customer has
used it for a while?
a) Apparel
b) Search good
c) Experience good
d) Office furniture
e) Airline tickets
What is a market firm?
a) Firm representing a particular industry
b) Financial firm
c) Subsidiary of the larger parent firm
d) Large scale firm
e) An independent outsourcing partner
Which of the following led to overbuilding of railroads in the 1860’s and 1870’s?
a) Reduction of taxes on railroads by the federal government
b) The success of railroads in Europe
c) The availability of financing due to public optimism
d) The low cost of labor to construct railroads
e) Increases in regulated freight rates by the Interstate commerce Commission
The reduction of co-ordination and hold-up problems depends on:
a) Governance arrangements
b) Manager contracts
c) Required quality of finished product
d) Cost of upstream vertical supplies
e) None of the above
Which of the following terms describes the situation created by a large dominant firm
where smaller firms can find buyers as long as they sustain a lower price?
a) Price umbrella
b) Price leading
c) Predatory pricing
d) Premium pricing
e) Price lining
The basic law of demand says that all other things being the same,
_______________________.
a) The lower the price of a product, the less of it consumers will purchase
b) The higher the price of a product, the less of it consumers will purchase
c) The lower the price of a product, the more of it consumers will purchase
d) The higher the price of a product, the more of it consumers will purchase
e) The greater the number of units of a product sold in the past, the more of it
consumers will purchase that product in the future
How did European governments help Airbus aggressively pursue a 50% market share in
its early years of operation?
a) Subsidies
b) High-interest loans
c) Helping to ensure scope economies from military aircraft division
d) Paying in excess of cost for military aircraft
e) Guaranteeing a set level of annual aircraft purchases
What problem preventing complete contracts refers to the limits on the capacity of
individuals to process information, deal with complexity and pursue rational aims?
a) Agency costs
b) Bounded rationality
c) Performance measurement difficulties
d) Asymmetric information
e) Contract body of law
By satisfying which of the following conditions can shareholders prevent management
driven acquisitions?
a) If shareholders could determine which acquisitions will lead to increased profits and
which will not
b) If shareholders could direct management to undertake only those acquisitions that
will increase shareholder value
c) If shareholders could provide management with the appropriate steps to conduct
when performing acquisitions
d) a & b
e) None of the above
Which of the following is a method a monopolist firm might use to prevent entry into a
market?
a) Limit pricing
b) Predatory pricing
c) Capacity expansion
d) All of the above
e) None of the above
What is a catchment area?
a) The area of a firm’s customers as defined by traditional county lines
b) The area a firm’s customers shops due to idiosyncratic reasons
c) The area a firm operates in which it has no competition
d) The area where a firms customer will go to shop in the event the firm were to raise
prices
e) The contiguous area from which a firm draws most of its customers
What empirical method generally is used to measure the degree to which products
substitute for each other?
a) Cross-price elasticity
b) Price comparison
c) Relatedness factor
d) Standard Industrial Classification
e) SSNIP
What term describes a firm that faces little or no competition in one of its input
markets?
a) Monopolist
b) Monopsonist
c) Oligopolist
d) Oligopsonist
e) Cartelist
If ·=.8 and P=$25, what is MR?
a) $20
b) $6.25
c) -$5
d) -$6.25
e) $5