ECO 550 Final Exam 2

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ECO 550 Final Exam

1. If two small perfectly competitive firms merge, the merged firm will be:

2. In a market characterized by many buyers and one seller, investment in informative advertising by a seller can ____ the price of a commodity to customers and lower their _____ cost of acquiring information.

3. Which of the following industries can create barriers to the entry of new firms due to size and specificity?

4. Which of the following activities can create an external cost?

5. Which of the following is an aim of a price-fixing agreement?

6. If the costs of negotiating and enforcing contracts are _____ relative to the benefits, buyers and sellers have incentives to make economically efficient arrangements that _____ value.

7. Refer to Table 10-1. What would be the combined gain of the two if both breach the unitization contract? The matrix given below represents the payoffs to oil well owners Mike and Frasel if they enter into a unitization contract. Each of the owners know the exact amount of oil in the pool and the market price of oil. Table 10-1

8. Which of the following exemplifies specific performance that a court might order from the party in breach of a contract?

9. Parties to the contract prefer to keep the actual agreement incomplete when:

10. Which of the following theories states that people who are highly risk-averse are less likely to engage in high-risk activities?

11. Which of the following situations can lead to a winner’s curse?

12. An individual will be considered risk neutral if:

13. Independent workers using specialized capital save the costs of contracting but risk:

14. A corporation’s _____ can sometimes influence its decisions without making efforts to replace its management.

15. Which of the following properties is common to a partnership business?

16. Which of the following is a disadvantage of the U-form structure?

17. _____ is the only type of firm where it is possible for a person to hold all of the information that matters for all types of decisions.

18. Identify the correct statement about relationships depicted in an organization chart.

19. During the peak season, when demand for pipeline transport of natural gas at the maximum legally allowable price exceeds the available capacity:

20. Which of the following changes can facilitate the transfer or outsourcing of formerly internal activities of a firm?

21. Successive monopolies face the problem of:

22. A competitive firm hires workers as long as:

23. The _____ of using the market for corporate control make it important to build incentives into executive pay packages that can reduce _____ by better aligning the incentives of shareholders and managers.

24.Over the long run, migration by workers to higher-wage regions:

25. If A and B are two disjoint sets, and “Pr” represents the probability, then Pr[A and B] will be:

26. Two events A and B in a sample space are considered _____ if the probability that A will happen is the same regardless of whether or not B has happened.

27. If the writer of an option, holds shares of the stock or an actual quantity of the commodity when she writes the call option on it, her position is said to be:

28. Alex’s production is worth $60, Harry’s is worth $40, Rob’s is worth $40, and Julia’s is worth $55. They decide to combine their resources and produce together. For this to be a superadditive game, which of the following conditions must hold?

29. Elizabeth’s opportunity cost of selling a widget is $18, while Jess values it at $27. Identify the correct statement from the following.

30. A characteristic function is:

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