Economics Question

Managerial Economics Flag question: Question 1 To follow the problem-solving algorithm, which one of the following is required? Group of answer choices Computerization of data within a business organization. A model of how humans behave, particularly “the rational actor” paradigm. Not restricting human action to a set of tractable rules. Assuming that humans are inherently altruistic. Flag question: Question 2 When an employee has enough information to make good decisions, and the incentive to do so, we say Group of answer choices that the employee’s incentives are orthogonal to the goals of the organization. that the employee’s incentives need to be removed in order to better help the organization. that the employee’s incentives are aligned with the goals of the organization. that the employee’s incentives are unnecessary and only come at a cost to the firm. Flag question: Question 3 Judging outcomes as good or moral due to the outcomes that result from actions is a _______ approach to morality. Judging outcomes according to their correspondence (or lack thereof) to some outside set of principles or standards is known as _______. Group of answer choices consequentialist; deontology deontologist; consequentialism consequentialist; consequentialism deontologist; deontology Flag question: Question 4 Arguing that governments ought to regulate monopolies because they charge prices that are too high is _______ argument. Group of answer choices a consequentialist a deontological neither deontological nor a consequentialist both a deontological and a consequentialist Flag question: Question 5 A buyer willingly buys a good if their _______ of the good is _______ the price of the good. Group of answer choices valuation; unrelated to valuation; only slightly less than valuation; less than valuation; greater than Flag question: Question 6 The difference between the maximum price the consumer is willing to pay and the price the consumer actually pays for a product is referred to as Group of answer choices market surplus. market shortage. consumer surplus. producer surplus. Flag question: Question 7 Total surplus, or total gain created from trade, equals Group of answer choices seller surplus. buyer surplus. the sum of seller and buyer surplus. profits earned by a firm. Flag question: Question 8 The biggest advantage of capitalism is that Group of answer choices it generates wealth with the help of government intervention. prices hinder in moving assets from high-value to low-value uses. it forces involuntary exchanges. it creates wealth by letting people follow their own self-interests. Flag question: Question 9 Technological advancement creates unemployment in firms that shut down or labor that is laid off. Wealth in this case is Group of answer choices destroyed since firms are shutting down and production of certain goods and services is decreasing. created since the dislocated labor and resources are absorbed by new firms created through the technological innovation, moving them to higher value use. destroyed since technological progress is leading to higher unemployment. created since the owners of firms save on the costs associated with compensating labor for their productive efforts. Flag question: Question 10 Price gouging Group of answer choices is outlawed trading at prices above a certain price level. is outlawed trading at prices below a certain price level. is an act of charging a high price to take advantage of shortages created by natural disasters. is an act of charging a low price to undercut all competitors until they exit the industry. Flag question: Question 11 Price ceilings cause: Group of answer choices Some suppliers to drop out of the market A decrease in the total production in the market The creation of black markets At least some suppliers to drop out of the market, a decrease in total production in the market, and the creation of black markets Flag question: Question 12 Fixed costs are Group of answer choices costs that vary with output. always equal to marginal costs. costs that do not vary with output. equal to total costs. Flag question: Question 13 All costs are _______ in the _______-run. Group of answer choices variable; long variable; short fixed; long fixed; short Flag question: Question 14 For a trucking company, all of the following are examples of fixed costs, except Group of answer choices tax accountant fees. package designing fees. insurance. gasoline costs. Flag question: Question 15 Sarah can bake 200 cookies in an hour or watch her favorite tv show. If she chooses to watch her show, her opportunity cost is Group of answer choices 200 cookies. 100 cookies. 150 cookies. indeterminant. Need more information. Flag question: Question 16 People tend to eat more at all-you-can-eat-buffets than they would at any other restaurants. This is so because the cost of consuming an additional item at an all-you-can-eat-buffet is Group of answer choices negative. zero. positive. non-zero. Flag question: Question 17 The hidden-cost fallacy occurs when Group of answer choices a firm considers irrelevant costs. a firm ignores relevant costs. a firm considers overhead or depreciation costs to make short-run decisions. a firm considers relevant costs. Flag question: Question 18 The additional cost incurred of producing and selling one more unit is called Group of answer choices marginal income. marginal revenue. marginal cost. marginal loss. Flag question: Question 19 In the short run, Group of answer choices some production costs are fixed. all inputs are variable. all inputs are fixed. no inputs are fixed. Flag question: Question 20 Marginal cost is ____________. Group of answer choices the cost of producing an additional unit of output the total cost of production the revenue from selling an additional unit of output the revenue received from not producing an additional unit of output Flag question: Question 21 Average cost of production is Group of answer choices total variable cost divided by total units produced. total fixed cost divided by total units produced. total cost divided by total units produced. equal to marginal cost. Flag question: Question 22 Table 4-3 # Units Produced Total Revenue Total Costs 0 0 200 1 600 660 2 780 720 3 840 780 4 890 870 5 910 980 Use Table 4-3 What is the marginal cost of the 5th unit? Group of answer choices $100 $105 $110 $115 Flag question: Question 23 What is the Customer Acquisition Cost? Group of answer choices Total cost of customers Average cost per customer The marginal cost of acquiring another customer The marginal benefit of losing a customer Flag question: Question 24 Incentive pay struggles to properly motivate behavior when Group of answer choices measuring performance is difficult. effort matters. there is little intrinsic desire to do the job. money boosts the recipient’s social status. Flag question: Question 25 Which of the following is most likely to be out of the control of an incentive-pay-based salesperson? Group of answer choices Identifying clients that could potentially utilize a particular product. The ability to develop better persuasion skills. A downturn in the macroeconomy. The quality of relationships with clients. Flag question: Question 26 Group disaster Mary, Jane, Janet and Samantha chose each other for a group project since they knew that they were all high achievers. Once the project rolled around however, their group actually did more poorly than the group where all the members knew that others were slackers. How did that happen? View keyboard shortcuts pView keyboard shortcutsAccessibility Checker 0 words Switch to the html editorFullscreen Flag question: Question 27 If GDP is expected to increase at a steady rate of 3% per year, how many years would it take for living standards to double? Group of answer choices 10 20 24 30 Flag question: Question 28 Scenario 5-2 A manufacturing firm is deciding whether or not to invest in a new printer that needs an initial investment of $150,000. The investment would increase cash flows in the first year by $80,000 and in the second year by $75,000. Use Scenario 5-2 If the interest rate is 10%, then the net present value of the investment is Group of answer choices $5,000. – $9,091. -$15,290. -$21,901. Flag question: Question 29 Hold-up problems usually occur when Group of answer choices one of the parties makes a heavy investment in equipment specific to its trading partner. one of the firms decides to invest heavily in general purpose equipment. costs are avoidable. costs are incurred. Flag question: Question 30 What are some of the solutions for a hold-up problem? Group of answer choices Mergers Contracts Exchange of ‘hostages’ All other answers listed Flag question: Question 31 Firms that anticipate hold-up, choose organizational or contractual forms Group of answer choices that give both parties the incentive to make relationship-specific investments that do not give both parties the incentive to exploit each other’s positions that do not give both parties an incentive to trade, even after the relationship-specific investments have been made that give both parties the incentive to exploit each other’s positions and an incentive to trade even after the relationshipspecific investments have been made Flag question: Question 32 What criteria do consumers apply when deciding whether or not to consume? Group of answer choices the consumer would only consume if the value of the good is less than the good’s market price. the consumer would only consume if their surplus is less than zero. the consumer would only consume if the price is higher than their highest willingness to pay. the consumer would consume only if the price is lower than their highest willingness to pay and if their surplus is greater than zero. Flag question: Question 33 Increasing production is consistent with which of the following conditions? Group of answer choices MR > MC MR < MC MR = MC MC = 0 Flag question: Question 34 If demand is elastic, then a price increase leads to an increase in revenue. Group of answer choices True False Flag question: Question 35 If the price elasticity of demand is -0.8 and the firm increases price, revenue will Group of answer choices increase. decrease. stay constant. become zero, they would lose all their customers. Flag question: Question 36 If cars are normal goods, a fall in income will Group of answer choices increase the demand for cars. decrease the demand for cars. have no effect on the demand for cars. increase the demand for complementary goods to cars. Flag question: Question 37 A price elasticity of demand of 2.3 implies Group of answer choices demand is inelastic. demand is elastic. demand is unitary elastic. demand is perfectly elastic. Flag question: Question 38 A product can be classified as an inferior good if an increase in the income causes Group of answer choices a decrease in the quantity demanded. a decrease in demand. an increase in demand. an increase in the quantity demanded. Flag question: Question 39 Average costs Group of answer choices fall at all levels of output. are falling when marginal costs are below average costs and rising when marginal costs are above average costs. are falling when marginal costs are above average costs and rising when marginal costs are below average costs. do not vary with output. Flag question: Question 40 Learning curves mean Group of answer choices you do not learn from experience. current production increases future unit costs. production today leads to higher costs in the future. you learn from experience, current production decreases future unit costs, and production today leads to lower costs in the future. Flag question: Question 41 Eddy’s Electronics found that instead of producing a streaming device and a gaming system separately, it is cheaper to incorporate streaming capabilities in their new version of the gaming system. Eddy’s Electronics is taking advantage of Group of answer choices economies of scale. learning curve. economies of scope. decreasing marginal costs. Flag question: Question 42 What are economies of scope? Group of answer choices The cost of producing two products jointly by one firm is more than the cost of producing them separately The cost of producing two products jointly by one firm is lesser than the cost of producing them separately The cost of producing two products jointly by one firm is equal to the cost of producing them separately The cost of producing two products jointly by one firm is lesser than the cost of switching from producing one of the products to the other Flag question: Question 43 Which of these statements are FALSE? Group of answer choices If production exhibits diseconomies of scope, firm should reduce the number of products to reduce costs. If production exhibits diseconomies of scope, firm should increase the number of products to reduce costs. If production exhibits economies of scope, firm should increase the number of products to reduce costs. If production exhibits economies of scope, firm should increase the number of products to reduce costs. Flag question: Question 44 The law of supply states that, holding other factors constant, as price increases Group of answer choices quantity supplied increases. quantity supplied decreases. quantity demanded increases. quantity demanded decreases. Flag question: Question 45 An increase in the price of laptop memory chips causes the price for laptops _______ and the quantity supplied for laptops _______. Group of answer choices increase; increase increase; decrease decrease; increase decrease, decrease Flag question: Question 46 People like consuming peanut butter and jelly together. The price of peanuts increases. At the same time, we see the price for Jelly rise. This would make the price for peanut butter _______ and the quantity demanded for peanut butter _______. Group of answer choices uncertain; decrease decrease; increase decrease; uncertain increase; uncertain Flag question: Question 47 Which of these is an example of a controllable factor for a firm that sells pizzas? Group of answer choices The price of the pizza The rate at which pizza orders are delivered The quality of the wings sold by the street vendor across the street The market price of pepperoni Flag question: Question 48 To earn profits, the market maker must Group of answer choices bid high, ask low. bid low, ask high. equalize the bid and ask price. not create the market. Flag question: Question 49 Labor and capital _______ and _______. Once this long-run equilibrium is reached, capital is _______ about where it goes because it earns the same return regardless of industry. Group of answer choices flow out of an industry when profits are low; are not utilized again; undetermined flow into an industry when profits are low; boost the returns of the industry; indifferent flow into an industry when profits are high; out of an industry when profits are negative; indifferent flow out of an industry when profits are high; are not utilized again; undetermined Flag question: Question 50 According to the indifference principle, housing prices Group of answer choices tend to converge over time. tend to leave individuals with strong opinions about where they want to live. tend to maintain a fixed average over time. either tend to leave individuals indifferent about where they live or tend to be different to compensate individuals for differences in living conditions. Flag question: Question 51 Low risk stocks are usually accompanied by Group of answer choices low returns. no returns. high returns. no sales. No one would buy low-risk stocks. Flag question: Question 52 In equilibrium, low risk assets earn _______ returns compared to high-risk assets. Group of answer choices higher lower similar equivalent Flag question: Question 53 A compensating wage differential is Group of answer choices the difference in wages paid to relatively more productive labor and relatively less productive labor holding all equal. a general term for compensation paid to an individual for switching jobs. the premium paid to a security holder to compensate them for bearing a higher risk. both the difference between the wage of an individual working in favorable conditions and the wage of an individual working in unfavorable conditions and compensation paid to an individual for working in a less desirable environment. Flag question: Question 54 A monopoly has Group of answer choices a perfectly elastic demand curve. a perfectly elastic supply curve. an inelastic demand curve. a less elastic demand curve than a competitive firm. Flag question: Question 55 In a monopoly, Group of answer choices the industry has high barriers to entry. the industry has high barriers to exit. the industry has high barriers to entry and exit. the industry has no barriers to entry or exit. Flag question: Question 56 More buyer power means Group of answer choices buyers would find it easier to capture the value created. buyers would find it more difficult to capture the value created. buyers would not be able to capture any value created. buyers would be able to afford higher prices. Flag question: Question 57 Porter’s five forces portray Group of answer choices a non-zero-sum game. a game where your profitability does not come at the expense of someone else’s. the ability of market participants to create a larger total pie. a zero-sum game where one firm’s profitability comes at the expense of some other firm’s. Flag question: Question 58 Which of the following is true according to the IO perspective? Group of answer choices Industry structure determines firm conduct which in turn determines firms’ performance Industry structure determines firm performance which in turn determines firms’ conduct Industry conduct determines firm structure which in turn determines firms’ performance Industry performance determines firm conduct which in turn determines firms’ structure Flag question: Question 59 The five forces model is a framework Group of answer choices for increasing buyer power in the market. for improving competition in the industry. for analyzing the attractiveness of an industry. for increasing supplier power in the market. Flag question: Question 60 All of these allow a firm to differentiate its product, except Group of answer choices product branding. reducing quality. advertising. limiting availability. Flag question: Question 61 Low cost strategies are usually found in industries where Group of answer choices products are particularly differentiated. price competition is less intense. products are not particularly differentiated and price competition tends to be fierce. brand loyalty is the dominant factor in a consumer’s decision. Flag question: Question 62 Cost-reduction generates Group of answer choices increases in long-run profitability. increases in long-run profitability only if the cost reduction is difficult to imitate. decreases in long run profitability. no change in profitability. Flag question: Question 63 Exchange rates between currencies are only of concern to individuals and businesses who find it necessary to travel to other countries. Group of answer choices True False Flag question: Question 64 Holding other things constant, a decrease in the inflation rate in the US compared to the Canadian economy will cause the demand for the Canadian dollar to _______ and the supply to _______. Group of answer choices increase; decrease increase, increase decrease; increase decrease; decrease Flag question: Question 65 When interest rates go down, people are Group of answer choices more likely to borrow. less likely to borrow. unaffected. just as likely to borrow or not borrow. Flag question: Question 66 Currency devaluation _______ export producers because _______. Group of answer choices helps; exports are more expensive hurts; exports are more expensive helps; exports are less expensive hurts; exports are less expensive Flag question: Question 67 Due to a boom in the US, the average rate of return on investments is likely to rise causing the demand for US dollar to Group of answer choices increase. decrease. not change. decrease to a level before the historical average level of demand. Flag question: Question 68 In order for bubbles to occur, expectations of a price increase usually _______ demand and _______ supply. Group of answer choices increases; increases increases; decreases decreases; increases decreases; decreases Flag question: Question 69 A widget costs $1000 in the US and CAD$1200 in Canada. The current exchange rate is 1USD=1.09CAD. At this rate, Group of answer choices the good costs more in the US. the good costs more in Canada. the good costs the same across the two countries. there can be no determination where the good would be cheapest. Flag question: Question 70 A firm should lower the prices on its goods Group of answer choices if the demand for the product is inelastic. if it acquires a firm selling a unit elastic good. if it acquires a firm selling a substitute good. if it acquires a firm selling a complement good. Flag question: Question 71 If promotional expenditures make demand less price elastic, then you should decrease the price when you promote the product. Group of answer choices True False Flag question: Question 72 A Swiss watch company advertises its history of superior craftsmanship. The company thinks that this will Group of answer choices make the demand for the product more elastic. make the customers more sensitive to the price. make the demand for the product more inelastic. make the customers indifferent to their watches. Flag question: Question 73 In order to increase sales, a firm can do all of the following except Group of answer choices increase the reference price for the product. decrease prices. differentiate their product. homogenize their product. Flag question: Question 74 All of the following are criticisms of the Robinson-Patman Act except Group of answer choices it can reduce consumer surplus. it can reduce producer surplus. it can create inefficiency through unconsummated transactions. it can increase producer surplus. Flag question: Question 75 An important lesson about pricing is Group of answer choices do not bargain with the customer. when bargaining with the customer, do not bargain over the bundled price, bargain over unit price. when bargaining with the customer, do not bargain over the unit price, bargain over the bundled price. bargain with the customer over everything. Flag question: Question 76 Table 14-2 Carving Knives No-name brand High-end professional series Home Users $40 $60 Professional Chefs $70 $130 Use Table 14-2 Assuming one customer of each type, how much would the firm make in revenue if it prices both its products optimally? Group of answer choices $110 $120 $130 $140 Flag question: Question 77 One reason demand curves slope downwards is Group of answer choices marginal value increases with each purchase. marginal value declines with each purchase. total value declines with each purchase. marginal value remains constant with each purchase. Flag question: Question 78 Which of the following is not a way to sell a customer additional units without dropping the price on previous purchases? Group of answer choices Offer volume discounts. Hold a temporary sale. Bundle the goods together. Offer two-part pricing (e.g., membership fees). Flag question: Question 79 Indirect price discrimination differs from direct price discrimination because Group of answer choices in indirect price discrimination high-value consumers can sometimes still get the low price. in direct price discrimination firms do not have to worry about cannibalizing. direct price discrimination encourages rivals to enter but indirect discrimination does not. there is no difference between the two. Flag question: Question 80 Airlines charge a _______ price to business travelers compared to leisure travelers because business travelers have a _______ demand than leisure travelers. Group of answer choices higher; more elastic higher; less elastic lower; more elastic lower; less elastic Flag question: Question 81 Arbitrage is characterized by all of the following except Group of answer choices is the act of buying low in one market and selling high in another market. can force a seller to go back to uniform pricing. can offset the benefits of direct price discrimination. maximizes the amount of consumer surplus that can be extracted by producers. Flag question: Question 82 Which of the following is FALSE about indirect price discrimination? Group of answer choices The firm must be able to identify at least two groups of customers. The firm must be able to charge different prices to the different value customers. The firm must be able to prevent arbitrage. The firm must be able to charge different prices to consumers with different elasticities. Flag question: Question 83 Which of the following is FALSE about indirect price discrimination? Group of answer choices It requires identifying some feature that is correlated with different value customers. The first must be able to charge different prices for different products. The firm must be able to prevent arbitrage. It could potentially involve giving discounts for different order volumes. Flag question: Question 84 The strategy of sorting customers into high or low value based on the amount of sales of a related product is known as Group of answer choices a damaged goods strategy. the willy-nilly strategy. metering. the undamaged goods strategy. Flag question: Question 85 In sequential games, Group of answer choices players take turns and observe other players’ choices before they make their choices. players take turns but do not observe other players’ choices before they make their choices. players move at the same time. players take turns simultaneously and observe other players’ choices. Flag question: Question 86 Scenario 15-1 Irene’s Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie’s Ice-cream. If it enters the market, Mattie’s can either accommodate and share $10 million in profits equally with Irene or him and cause a 5 million loss for each in a price war. Use Scenario 15-1 What would the profits be for Mattie’s Dairy if Irene does enter the market? Group of answer choices -5 million 5 million 15 million Zero Flag question: Question 87 Scenario 15-1 Irene’s Dairy is deciding whether or not to enter the market for ice cream, currently monopolized by Mattie’s Ice-cream. If it enters the market, Mattie’s can either accommodate and share $10 million in profits equally with Irene or him and cause a 5 million loss for each in a price war. Use Scenario 15-1 If Mattie can commit to always fight entry, what would Irene’s best response be? Group of answer choices Enter Not enter Run The best response cannot be determined given the information available. Flag question: Question 88 Scenario 15-2 Two cartoon characters, Catbert and Dogbert are playing a simultaneous hit and tell game. Catbert can hit Dogbert or not and Dogbert can tattle on Catbert or not. Relative to no hitting and no tattling, if Catbert hits Dogbert, and Dogbert tattles they both experience a loss of 10. If Catbert hits and Dogbert does not tattle, then Dogbert gets a bruise (a loss of 5) but Catbert gains 5. If Dogbert tattles untruthfully, Dogbert gets a gain of 5 and Catbert loses 5. If they get along, no one gets anything. Use Scenario 15-2 If Dogbert wants to not be hit, what strategy could Dogbert follow? Group of answer choices Threaten to not tattle Never tattle Threaten to tattle Do nothing Flag question: Question 89 Scenario 15-4 A group of roaming bandits known simply as The Bandits are looking to extort a nearby village. The nearby village has a town crier (known as The Crier) who serves as a lookout and early warning system to the village. The Crier is known to enjoy the pats on the back that come with providing the village with a warning (whether it is a false alarm or not). The Crier is not punished for false alarms. Meanwhile, The Crier could always choose to save themselves instead of warning the village. The Bandits have the choice of attacking the village or not attacking the village. If The Bandits attack and The Crier doesn’t warn the village, then The Bandits experience a gain of 5 and The Crier experiences a loss of 5. If The Bandits don’t attack and The Crier does not warn the village, then both receive no gains or losses. If The Crier warns the village and The Bandits don’t attack, then The Crier gains 5 while The Bandits lose 5. If The Bandits carry out the attack and The Crier warns the village, then both take a loss of 10. Use Scenario 15-4 If The Bandits decides to attack the village, what would The Crier’s best response be? Group of answer choices Warn the village. Do not warn. Randomize. The best response cannot be determined in this scenario. Flag question: Question 90 Scenario 15-6 A couple gets into an argument deciding where they would go out together. Both like to spend time with each other and have the payoffs shown in Scenario 15-6. Sally Sam Ballet Boxing Ballet 5,10 0,0 Boxing 0.0 10,5 Use Scenario 15-6 If Sally decides to go to the boxing match, what is Sam’s best response? Group of answer choices Go to the ballet Go to the boxing match Run away Hide Flag question: Question 91 Scenario 15-7 A shoplifter and a security guard are playing a simultaneous game. If the shoplifter steals and the security guard is vigilant, the shoplifter gets caught, suffers a loss of 20, and the security guard gets a bonus worth 15. If the shoplifter steals and the security guard is not vigilant, the shoplifter does not get caught and gains 15 and the guard loses 5. If the shoplifter does not steal and the guard is vigilant, the guard loses 3 for the effort, while the shoplifter gains nothing and if the shoplifter does not steal and the guard is not vigilant, neither gain anything Use Scenario 15-7 What is the Nash equilibrium of this simultaneous game? Group of answer choices Steal, Vigilant Steal, Not vigilant Not steal, Vigilant The equilibrium is in mixed strategies. Flag question: Question 92 In a tit-for-tat strategy, a player_______ Group of answer choices strikes first. waits to respond to cheating. holds to the “punishment” strategy indefinitely. responds immediately to cheating. Flag question: Question 93 Nash equilibrium is: Group of answer choices where one player maximizes his payoff and the other doesn’t when each player’s strategy is the best response to the other player’s strategy where the outcome is always efficient difficult to determine Flag question: Question 94 Game theory assumes that players in the game act all of the following except Group of answer choices rationally. to bring about the most even payoffs. optimally. self-interestedly. Flag question: Question 95 In the strategic view of bargaining: Group of answer choices Bargaining is described by standard game theory rules The game is played without specific strategies The game always results in a fifty-fifty split The game is played just for the fun of it Flag question: Question 96 Scenario 16-1 Consider a simultaneous move game between a union and a company. If both the parties bargain hard, each would gain nothing. If only one party bargains hard, the accommodating party gets a profit of $1 million while the bargaining party gets $5 million, while if they both accommodate, they each get $3 million. Use Scenario 16-1 Could either party do better? Group of answer choices Yes, both parties can do better without hurting each other if they cooperated Yes, one party can do better, but only at the expense of the other No, neither party can do better No, each party has its best possible outcome Flag question: Question 97 Scenario 16-2 Consider a sequential game between a shopkeeper and a haggling customer. The party who moves first chooses either a high price ($50) or low price ($20) and the second mover either agrees to the price or walks away from the deal and neither party gets anything. Ignore costs and assume the customer values the item at $60. Use Scenario 16-2 If the customer moves first and offers a low price, what is the best response of the shopkeeper? Group of answer choices Accept the low price. Walk away from the deal. Throw the haggling customer out of your store. Shut down your store. Flag question: Question 98 Scenario 16-2 Consider a sequential game between a shopkeeper and a haggling customer. The party who moves first chooses either a high price ($50) or low price ($20) and the second mover either agrees to the price or walks away from the deal and neither party gets anything. Ignore costs and assume the customer values the item at $60. Use Scenario 16-2 Would the customer be able to convince the shopkeeper that he would walk out if he receives a high price? Group of answer choices Yes, because walking out is most profitable move for the customer Yes, because walking out is at least a break-even strategy for the customer Yes, because walking out is a credible threat in this case. No, because the customer has nothing to gain from walking out nor is walking out a credible threat in this case. Flag question: Question 99 Scenario 16-2 Consider a sequential game between a shopkeeper and a haggling customer. The party who moves first chooses either a high price ($50) or low price ($20) and the second mover either agrees to the price or walks away from the deal and neither party gets anything. Ignore costs and assume the customer values the item at $60. Use Scenario 16-2 In the strategic view of bargaining, the outcome depends on all of the following except: Group of answer choices who makes the first move. who can commit to a position. whether or not the other party can make a countermove. the outside options available to players that cannot be formally modeled. Flag question: Question 100 Which of the following will improve your salary bargaining position? Group of answer choices Wait until the large project you were integral to is completed. Wait until your employer has hired many others with similar skills to yours. Wait until your employer has invested greatly into a long-term project you lead. Wait until your employer buys new machinery that you are incapable of operating. Flag question: Question 101 Under the non-strategic view of bargaining, the terms of agreement are determined by all of the following except Group of answer choices each party’s outside options. your gain from agreement. your opponent’s gain from agreement. your ability to commit to a position. Flag question: Question 102 Under the non-strategic view of bargaining, the terms of agreement are determined by all of the following except Group of answer choices your opponent’s eagerness to reach agreement. your outside options. your opponent’s gain from agreement. your ability to commit to a position. Flag question: Question 103 Scenario 16-4 Consider a non-strategic game between a firm and its union. The value to the firm of getting the workers back to work is $5 million. The union’s value of getting back to work is $5 million. The firm can hire nonunion workers (“scabs”), giving the firm a disagreement value of $1 million and the union members can find temporary employment elsewhere, making the union’s disagreement value $2 million. Use Scenario 16-4 The firm would have a better bargaining position in the negotiations if Group of answer choices it cannot hire the non-union “scabs” at a better wage. the union has older workers who can afford to be off work for a relatively long period of time. the union has a strike fund to pay workers during work stoppage actions. it can hire the non-union “scabs” at a better wage and the union is made up of younger workers that cannot to go without work. Flag question: Question 104 Jim is haggling with a car dealer over the sale price of a used car. When he entered the dealership, it was empty. During the negotiations, a second customer walks in, interested in that particular car, and the dealer rejects Jim’s offer. This is because Group of answer choices the car dealer’s disagreement value decreased. the car dealer’s disagreement value increased. the car dealer’s disagreement value did not change. the car dealer’s agreement value increased. Flag question: Question 105 Jim is haggling with a car dealer on the price of a used car. If the dealer is getting a bonus per sale made, in addition to the commission, Jim is more likely to be able to Group of answer choices get the car cheap. pay a higher price for the car. walk away from the deal. get the car at the same price as it would have been even if the dealer wasn’t receiving any kind of bonus.

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