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ECON 6115 > HW 7 > Flashcards

HW 7 Flashcards

1
Q

a learner index of 0 suggests
- monopoly
- monopolistic competition
- oligopoly
- perfect competition

A

perfect competition

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2
Q

the causal view of an industry is that
- market structure causes firms to behave in a certain way
- market performance causes firms to have a certain structure
- market performance causes firms to behave in a certain way
- behavior causes firms to have a certain structure

A

market structure causes firms to behave in a certain way

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3
Q

the dansby-willig index measures market
- structure
- performance
- conduct
- behavior

A

performance

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4
Q

which of the following may transform an industry from oligopoly to monopolistic competition
- entry of new firms
- significant vertical integration
- exit of firms
- a series of horizontal mergers

A

entry of new firms

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5
Q

monopolistic competition is characterized by
- employing labor from a perfectly competitive labor market
- Rothschild indices that are close to zero
- concentration ratios that are well above zero
- differentiated products

A

differentiated products

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6
Q

according to the video - principal agent problem - ____ is when a person takes excessive risks because another person bears the burden
- moral hazards
- incentive contract
- fixed salary
- external incentives

A

moral hazards

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7
Q

according to the video - HHI Investopedia - HHI index of ____ indicates there is not much market concentration
- 1296
- 10,000
- 3960
- 5970

A

1296

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8
Q

according to the video - Horizontal integration- one of the reasons for horizontal integration:
- to expand internationally
- to increase capacity
- to expand brand equity to new product lines
- all answers are correct

A

all answers are correct

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9
Q

what is the optimal method for procuring inputs that have well defined and measurable quality specifications and require highly specialized investments?
- theft
- vertical integration
- contract
- spot exchange

A

contract

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10
Q

what is the optimal method for procuring a modest number of standardized inputs that are sold by many firms in the marketplace?
- contract
- theft
- spot exchange
- vertical integration

A

spot exchange

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11
Q

when choosing between spot checks/hidden video cameras in the workplace and pay for performance pay schemes to influence worker performance:

which of these two options may adversely affect the morale of the workers?
- pay for performance pay schemes
- spot checks/hidden video cameras

which of these two options will require more employees in order to be effective?
- spot checks/hidden video cameras
- pay for performance schemes

which of these two options will be less effective when output is a function of group performance?
- pay for performance pay schemes
- spot checks/hidden video cameras

A

which of these two options may adversely affect the morale of the workers?
- spot checks/hidden video cameras

which of these two options will require more employees in order to be effective?
- spot checks/hidden video cameras

which of these two options will be less effective when output is a function of group performance?
- pay for performance pay schemes

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12
Q

spot exchange can be inefficient in the presence of
- opportunism
- a complex contracting environment
- spot checks
- specialized investments

A

opportunism

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13
Q

a person who monitors the production process and evaluates the productivity of workers is
- a manager
- an employee
- a shareholder
a self proprietor

A

a manager

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14
Q

an incentive for managers to maximize profits is all of the following except
- reputation
- performance bonuses
- takeovers
- a fixed annual salary

A

a fixed annual salary

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15
Q

a potential problem with piece-rate plans is that
- workers will produce a large quantity
- workers have no incentive to work hard
- it is difficult for managers to control
- workers may stress quantity instead of quality

A

workers may stress quantity instead of quality

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16
Q

which type of compensation mechanism works by threats
- piece rate
- spot check
- revenue sharing
- profit sharing

A

spot check

17
Q

Ten firms compete in a market to sell product X. The total sales of all firms selling the product are $3,000,000. Ranking the firms’ sales from highest to lowest, we find the top four firms’ sales to be $410,000, $355,000, $295,000 and $205,000 respectively. Calculate the four firm concentration ratio in the market for product X.

round to 2 decimal places

A

42.17%

18
Q

Suppose the own price elasticity of market demand for retail gasoline is -0.5, the Rothschild index is 0.3 and a typical gasoline retailer enjoys sales of $1,700,000 annually. What is the price elasticity of demand for a representative gasoline retailer’s product?

round to 2 decimal places

A

-1.67

19
Q

A firm has $1,300,000 in sales, a Lerner index of 0.64, and a marginal cost of $40, and competes against 900 other firms in its relevant market.

round to 2 decimal places

a. What price does this firm charge its customers?

b. By what factor does this firm mark up its price over marginal cost?

A

a. What price does this firm charge its customers?

   111.11

b. By what factor does this firm mark up its price over marginal cost?

  2.78
20
Q

Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition or oligopoly.

a. Industry A has a four firm concentration ratio of 0.005 percent and a Herfindahl-Hirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34.
- perfectly competitive industry
- monopoly industry
- oligopoly industry
- monopolistically competitive industry

A

monopolistically competitive industry

21
Q

Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition or oligopoly.

b. Industry B has a four firm concentration ratio of 0.0001 percent and Herfindahl-Hirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023.
- perfectly competitive industry
- monopoly industry
- oligopoly industry
- monopolistically competitive industry

A

perfectly competitive industry

22
Q

Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition or oligopoly.

c. Industry C has a four firm concentration ratio of 100 percent and Herfindahl-Hirschman index of 10,000. A representative firm has a Lerner index of 0.4 and Rothschild index of 1.0.
- perfectly competitive industry
- monopoly industry
- oligopoly industry
- monopolistically competitive industry

A

monopoly industry

23
Q

Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition or oligopoly.

d. Industry D has a four firm concentration ratio of 100 percent and Herfindahl-Hirschman index of 5,573. A representative firm has a Lerner index of 0.43 and Rothschild index of 0.76.
- perfectly competitive industry
- monopoly industry
- oligopoly industry
- monopolistically competitive industry

A

oligopoly industry

ECON 6115 (3 decks)

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