HW 7 Flashcards
a learner index of 0 suggests
- monopoly
- monopolistic competition
- oligopoly
- perfect competition
perfect competition
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
market structure causes firms to behave in a certain way
the dansby-willig index measures market
- structure
- performance
- conduct
- behavior
performance
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
entry of new firms
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
differentiated products
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
moral hazards
according to the video - HHI Investopedia - HHI index of ____ indicates there is not much market concentration
- 1296
- 10,000
- 3960
- 5970
1296
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
all answers are correct
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
contract
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
spot exchange
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
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
spot exchange can be inefficient in the presence of
- opportunism
- a complex contracting environment
- spot checks
- specialized investments
opportunism
a person who monitors the production process and evaluates the productivity of workers is
- a manager
- an employee
- a shareholder
a self proprietor
a manager
an incentive for managers to maximize profits is all of the following except
- reputation
- performance bonuses
- takeovers
- a fixed annual salary
a fixed annual salary
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
workers may stress quantity instead of quality
which type of compensation mechanism works by threats
- piece rate
- spot check
- revenue sharing
- profit sharing
spot check
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
42.17%
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
-1.67
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. 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
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
monopolistically competitive industry
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
perfectly competitive industry
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
monopoly industry
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
oligopoly industry
