< Liberty UniversityBUSI 620 Test 2 >

Question 1                                                                                                                                          2 out of 2 points

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

Question 2                                                                                                                                          2 out of 2 points

In a two-player game, which of the following is a Nash equilibrium?

Question 3                                                                                                                                          0 out of 2 points

Antilock brakes, airbags, and seatbelts increased the number of accidents While simultaneously decreasing the number of fatal accidents. Why does this happen?

Question 4                                                                                                                                          2 out of 2 points

A movie theatre  that charges a lower price for matinee: than for evening showings is engaging in

Question 5                                                                                                                                          2 out of 2 points

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 6                                                                                                                                          0 out of 2 points

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 7                                                                                                                                          2 out of 2 points

Which of these deals with asymmetry of information?

Question 8                                                                                                                                          2 out of 2 points

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 9                                                                                                                                          2 out of 2 points

The prisoners' dilemma explains why

Question 10                                                                                                                                       0 out of 2 points

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

Question 11                                                                                                                                       2 out of 2 points

Identify the Nash equilibrium in the following game-

Question 12                                                                                                                                       2 out of 2 points

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

Question 13                                                                                                                                       2 out of 2 points

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 14                                                                                                                                       0 out of 2 points

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 15                                                                                                                                       2 out of 2 points

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 16                                                                                                                                       2 out of 2 points

The restaurant industry has a market structure that comes closest to

Question 17                                                                                                                                       2 out of 2 points

A firm that is considering one independent project should accept it if

Question 18                                                                                                                                       0 out of 2 points

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 19                                                                                                                                       2 out of 2 points

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 20                                                                                                                                       2 out of 2 points

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

Question 21                                                                                                                                       0 out of 2 points

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

Question 22                                                                                                                                       2 out of 2 points

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

Question 23                                                                                                                                       2 out of 2 points

A strategy that is best regardless of What rival players do is called

Question 24                                                                                                                                       2 out of 2 points

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

Question 25                                                                                                                                       2 out of 2 points

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

Question 26                                                                                                                                       2 out of 2 points

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 27                                                                                                                                       2 out of 2 points

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

Question 28                                                                                                                                       2 out of 2 points

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

Question 29                                                                                                                                       2 out of 2 points

Which of the following made monopolization and restraint of trade illegal?

Question 30                                                                                                                                       2 out of 2 points

Which of the following defines a zero-sum game?

Question 31                                                                                                                                       2 out of 2 points

Suppose that the firms in an oligopolistic market engage in a price wm and, as a result, all firms earn lower profits. Game theory would describe this as

Question 32                                                                                                                                       2 out of 2 points

In the short run, a monopolist will shut down if it is producing a level of output Where marginal revenue is equal to short-run marginal cost, but price is

Question 33                                                                                                                                       2 out of 2 points

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

Question 34                                                                                                                                       2 out of 2 points

The break-up of AT&T in 1984 separated the production of long distance and local telephone service and sacrificed benefits from

Question 35                                                                                                                                       2 out of 2 points

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?

Question 36                                                                                                                                       2 out of 2 points

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 37                                                                                                                                       2 out of 2 points

An individual must decide Whether or not to pursue a business opportunity. Ifhe 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

Question 38                                                                                                                                       2 out of 2 points

The market demand curve for a perfectly competitive industry is QD=12-2P- The market supply curve is QS=3+P. The market will be in equilibrium if

Question 39                                                                                                                                       2 out of 2 points

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 40                                                                                                                                       2 out of 2 points

In game theory, a dominant strategy refers to a choice