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Description	Quiz - Chapter 16
Instructions	Quiz – Chapter 16 Chapter 16 quiz covers the theories and concepts you have read in chapter 16. The quiz is open-book and must be completed on the first launch. This quiz is not timed however Blackboard may time-out after 2 hours 30 minutes so please watch the time carefully. The quiz can not be saved or restarted once it is launched. The quiz is due Day 7, Sunday 11:59 pm ET.
Multiple Attempts	Not allowed. This test can only be taken once.
Force Completion	Once started, this test must be completed in one sitting. Do not leave the test before clicking Save and Submit.

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Question 1

1. Which of the following are qualifications of the Coase Theorem?

	a.	technical transaction costs must remain low and be unaffected if liability assignment is reversed
	b.	both parties must operate in a purely competitive market
	c.	one party quickly makes an offer the other is just willing to accept only when the information regarding payoffs is complete, certain and known to both parties
	d.	all of the above are correct
	e.	only a and c

5 points

Question 2

1. The Coase Theorem works best in places that transaction costs for contracts among people is low. Often in the world of torts and externalities both parties can claim that they have rights to impose on others. One case is that of a railroad that is noisy and scares the cattle and the rancher whose cattle sometimes wander in front of moving trains causing damage to them and the train. What does the Coase say would happen?

	a.	If transaction costs are low, the efficient activity will occur, either the rancher or railroad installing fences to protect from rampaging cattle and/or sound insulation with trees, or if it is cheaper, fewer train trips per day. The cheapest or most efficient solution will happen, regardless of who is assigned the original property right.
	b.	The train should have property right to be safe from wandering cattle, and the rancher should be liable for train damage of rampaging cattle.
	c.	The rancher should have the property right to be safe from noisy trains, and the railroad should be liable for weight loss of cattle from train whistles and rumbling noise.

15 points

Question 3

1. The Herfindahl-Hirschman index (also shortened to just the Herfindahl index) is a measure of ____.

	a.	market concentration
	b.	income distribution
	c.	technological progressiveness
	d.	price discrimination
	e.	none of the above

5 points

Question 4

1. The Sherman Act prohibits:

	a.	contracts in restraint of commerce
	b.	monopolization of an industry
	c.	price discrimination
	d.	a and b
	e.	a, b, and c

5 points

Question 5

1. The ____ is equal to the sum of the squares of the market shares of all the firms in an industry.

	a.	market concentration ratio
	b.	Herfindahl-Hirschman index
	c.	correlation coefficient
	d.	standard deviation of concentration
	e.	none of the above

5 points

Question 6

1. The antitrust laws regulate all of the following business decisions except ____.

	a.	monopolistic practices
	b.	wage levels
	c.	collusion
	d.	mergers
	e.	price discrimination

5 points

Question 7

1. The concept of market conduct includes such things as ____.

	a.	pricing behavior of the firm or group of firms
	b.	product policy of the firm or group of firms
	c.	the degree of seller and buyer concentration in the market
	d.	a and b only
	e.	a, b, and c

5 points

Question 8

1. The concept of market structure refers to three main characteristics of buyers and sellers in a particular market. These include ____.

	a.	the degree of seller and buyer concentration in the market
	b.	the degree of actual or imagined differentiation between the products or services of competing producers
	c.	the pricing behavior of the firms
	d.	a and b
	e.	a, b, and c

5 points

Question 9

1. The lower the barriers to entry and exit, the more nearly a market structure fits the ____ market model.

	a.	monopolistic competition
	b.	perfectly contestable
	c.	oligopoly
	d.	monopoly
	e.	none of the above

5 points

Question 10

1. The sentiment for increased deregulation in the late 1970's and early 1980's has been felt most significantly in the price regulation of

	a.	automobiles
	b.	transportation
	c.	grain
	d.	electric power generation
	e.	coal

5 points

Question 11

1. Which of the following is NOT a possible resolution of externalities?

	a.	taxes and subsidies
	b.	cap and trade
	c.	regulatory directives
	d.	Coasian bargaining
	e.	all of the above are possible resolutions of externalities

5 points

Question 12

1. Which of the following public policies has (have) the effect of restricting competition?

	a.	licensing
	b.	patents
	c.	import quotas
	d.	a and b only
	e.	a, b, and c

5 points

Question 13

1. ____ occurs whenever a third party receives or bears costs arising from an economic transaction in which the individual (or group) is not a direct participant.

	a.	Pecuniary benefits and costs
	b.	Externalities
	c.	Intangibles
	d.	Monopoly costs and benefits
	e.	none of the above

5 points

Question 14

1. ____ yields the same results as the theory of perfect competition, but requires substantially fewer assumptions than the perfectly competitive model.

	a.	Baumol's sales maximization hypothesis
	b.	The Pareto optimality condition
	c.	The Cournot model
	d.	The theory of contestable markets
	e.	none of the above

5 points

Question 15

1. Industry A has market shares of 50, 30, and 20. Industry B has market shares of 45, 40, and 15. Hint: HHI = Σ (s i 2), where s i is the market shares of the i-th firm in the industry.

	a.	The Herfindahl index for B is 3,600
	b.	The Herfindahl index is for B is 4,000.
	c.	The Herfindahl index for A is greater than for B.
	d.	The Herfindahl index for A is 100.
	e.	The Herfindahl index for A is 3,800.

20 points

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