Generally, revenue-based incentive schemes:
A. reduce incentives to produce low-quality products.
B. increase incentives to minimize costs.
C. reduce worker productivity.
D. reduce incentives to produce low-quality products and increase incentives to
minimize costs.
In a competitive industry with identical firms, long-run equilibrium is characterized by:
A. P = AC.
B. P = MC.
C. MR = MC.
D. All of the statements associated with this question are correct.
A relationship-specific exchange occurs when:
A. a partnership is dissolved.
B. specialized investments are important.
C. a partnership is initiated.
D. shareholders receive dividends.
An industry consists of six firms with annual sales of $300, $500, $400, $700, $600,
and $600. What is the industry’s HHI?
A. 1,659
B. 1,779
C. 1,839
D. 1,909
Which of the following pairs of goods are probably complements?
A. Televisions and roller skates.
B. Frozen yogurt and ice cream.
C. Steak and chicken.
D. Hamburgers and ketchup.
Which of the following statements is NOT true?
A. The Dutch and first-price, sealed-bid auctions are strategically equivalent.
B. A mineral rights auction is a common value auction.
C. An auctioneer is always indifferent between different kinds of auctions.
D. An English auction yields higher expected revenues than a second-price, sealed-bid
auction when bidders are risk averse.
Suppose the inverse market demand is given by P = 105 – Q. If the incumbent continues
to produce 40 units of output, which of the following equations best summarizes the
potential entrant’s residual demand curve?
A. P = 65 – 2Q
B. P = 20 – 0.5Q
C. P = 150 – Q
D. P = 65 – Q
Suppose that the demand in a particular industry is given by Qd = 500 – 2P. When the
market price in the industry is $50 per unit, total demand in the industry is _________.
Furthermore, assume that the entire market consists of four firms that share the market
equally. The HHI under these conditions is then _________.
A. 225 units; 1,600
B. 400 units; 2,500
C. 225 units; 3,333.33
D. 400 units; 10,000
You are the manager of a monopoly that faces a demand curve described by P = 80 –
5Q. Your costs are C = 10 + 5Q. The revenue-maximizing output is:
A. 2.5
B. 5
C. 8
D. None of the answers is correct.
The change in total output attributable to the last unit of an input is the:
A. total product.
B. average product.
C. marginal product.
D. marginal return.
Which of the following is NOT true about a differentiated-product Bertrand duopoly?
A. Firm 1 and firm 2’s prices will be equal to marginal cost.
B. Firm 1’s price will always be above marginal cost, while firm 2’s price will be less
than marginal cost.
C. Firm 1’s price will always be less than marginal cost, while firm 2’s price will be
above marginal cost.
D. None of the answers is correct.
The expected revenues in auctions with risk-averse bidders with independent private
values will be:
A. English > Second price > First price = Dutch.
B. English = Second price = First price = Dutch.
C. English > Second price > or < First price = Dutch.
D. First price = Dutch > English = Second price.
Marginal benefit refers to:
A. the average benefits that arise by using an additional unit of the managerial control
variables.
B. the additional benefits that arise by using an additional unit of the managerial control
variables.
C. the change in average benefits arising from a change in the control variable.
D. None of the statements associated with this question are correct.
A firm has a total cost function of C(Q) = 50 + 10Q1/2. The firm experiences:
A. economies of scale.
B. constant returns to scale.
C. diseconomies of scale.
D. All of the statements associated with this question are correct, depending on the
quantity.
Most workers view leisure and income as:
A. goods.
B. bads.
C. goods and bads, respectively.
D. bads and goods, respectively.
According to the table below, what is the average variable cost of producing 50 units of
output?
A. 21
B. 34
C. 14
D. 20