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Question 1 A movie theater that charges a lower price for matinees than for evening showings is engaging in

Question 2 The market demand curve for a perfectly competitive industry is QD=122P.


Question 3 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 4 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 5 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 6 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 7 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 8 Suppose that the firms in an oligopolistic market engage in a price war and, as a result, all firms earn lower profits. Game theory would describe this as

Question 9


Identify the Nash equilibrium in the following game.

Question 10 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 11 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 12


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 13 In game theory, a dominant strategy refers to a choice

Question 14 Which of the following is a device that controls imports and generates government revenue?

Question 15 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? (the chart applies to each location)


Question 16 A firm that is considering one independent project should accept it if Selected Answer: the internal rate of return on the project exceeds the firm's cost of capital

Question 17 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 18 Which of the following is always illegal in the U.S.?


Question 19 The restaurant industry has a market structure that comes closest to

Question 20 Which of these deals with asymmetry of information?

Question 21 If an increase in output by a firm imposes uncompensated costs on other firms, these costs are referred to as

Question 22 A firm can borrow at an interest rate of 5%. Its marginal tax rate is 40%. What is its cost of

debt?

Question 23


Which of the following is a condition required for the practice of price discrimination?

Question 24 In the short run, a monoplist will shut down if it is producing a level of output where marginal revenue is equal to shortrun marginal cost, but price is

Question 25 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 26 In repeated games, a strategy that involves attacking players that attack you and cooperating with players that cooperate with you is a

Question 27


One difference between the public interest theory and the economic theory of regulation is that the former

Question 28 The prisoners' dilemma explains why

Question 29 A strategy that is best regardless of what rival players do is called

Question 30 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 31


When several independent firms form a temporary network to take advantage of a shortterm business opportunity, the result is called a

Question 32 The threat of new entrants would be higher under which of the following conditions?

Question 33 Which of the following made monopolization and restraint of trade illegal? Selected Answer: Sherman Act

Question 34 Which of the following is a characteristic of both monopolistic competition and perfect competition?

Question 35 Antilock brakes, airbags, and seatbelts increased the number of accidents while


simultaneously decreasing the number of fatal accidents. Why does this happen?

Question 36 An individual must decide whether or not to pursue a business opportunity. If he 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 criteria to this decision.

Question 37 Which of the following is an example of the prisoners' dilemma?

Question 38 Which of the following defines a zerosum game?

Question 39 The breakup of AT&T in 1984 separated the poduction of long distance and local telephone service and sacrificed beneftis from


Question 40 In a twoplayer game, which of the following is a Nash equilibrium?


Busi 620 week 8 test 2 (100 % score)