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Credibility in threats and commitments in sequential games is based on

		randomizing one's actions so they are unpredictable
		explicit communications with competitors
		effective scenario planning
		analyzing best reply responses

In a game, a dominated strategy is one where:

		It is always the best strategy
		It is always the worst strategy
		It is the strategy that is the best among the group of worst possible strategies.
		Is sometimes the best and sometimes the worst strategy

The starting point of many methods for predicting equilibrium strategy in sequential games is

		designing proactive reactions to rival actions
		information sets
		uncertain outcomes
		backwards induction based on an explicit order of play
		endgame analysis

If one-time gains from defection are always less than the discounted present value of an infinite time stream of cooperative payoffs at some given discount rate, the decision-makers have escaped

		the Folk Theorem
		the law of large numbers
		the Prisoner's dilemma
		the paradox of large numbers
		the strategy of recusal

Which of the following pricing policies best identifies when a product should be expanded, maintained, or discontinued?

		full-cost pricing policy
		target-pricing policy
		marginal-pricing policy
		market-share pricing policy
		markup pricing policy

To maximize profits, a monopolist that engages in price discrimination must allocate output in such a way as to make identical the ____ in all markets.

		ratio of price to marginal cost
		ratio of marginal cost to marginal utility
		ratio of price to elasticity
		marginal revenue

The following are possible examples of price discrimination, EXCEPT:

		prices in export markets are lower than for identical products in the domestic market.
		senior citizens pay lower fares on public transportation than younger people at the same time.
		a product sells at a higher price at location A than at location B, because transportation costs are higher from the factory to A.
		subscription prices for a professional journal are higher when bought by a library than when bought by an individual.

__ is a new product pricing strategy which results in a high initial product price. This price is reduced over time as demand at the higher price is satisfied.

		Prestige pricing
		Price lining
		Skimming
		Incremental pricing

Third-degree price discrimination exists whenever:

		the seller knows exactly how much each potential customer is willing to pay and will charge accordingly.
		different prices are charged by blocks of services.
		the seller can separate markets by geography, income, age, etc., and charge different prices to these different groups.
		the seller will bargain with buyers in each of the markets to obtain the best possible price.

Governance mechanisms are designed

		to increase contracting costs
		to resolve post-contractual opportunism
		to enhance the flexibility of restrictive covenants
		to replace insurance

When retail bicycle dealers advertise and perform warranty repairs but do not deliver the personal selling message that Schwinn has designed as part of the marketing plan but cannot observe at less than prohibitive cost, the manufacturer has encountered a problem of ____.

		reliance relationships
		uncertainty
		moral hazard
		creative ingenuity
		insurance reliance

Non-redeployable durable assets that are dependent upon unique complementary and perfectly redeployable assets to achieve substantial value-added will typically be organized as

		an export trading company
		a spot market contract
		a vertically integrated firm
		an on-going relational contract
		a joint stock company.

When someone contracts to do a task but fails to put full effort into the performance of an agreement, yet the lack of effort is not independently verifiable, this lack of effort constitutes a

		breach of contractual obligations
		denial of good guarantee
		loss of reputation
		moral hazard

Buying electricity off the freewheeling grid at one quarter 'til the hour for delivery on the hour illustrates:

		relational contracts with distributors
		vertical requirements contracts
		spot market transactions
		variable price agreements

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

		coal
		grain
		transportation
		automobiles
		electric power generation

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

		Baumol's sales maximization hypothesis
		The Pareto optimality condition
		The Cournot model
		The theory of contestable markets

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

		market concentration
		income distribution
		technological progressiveness
		price discrimination

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.

		Pecuniary benefits and costs
		Externalities
		Intangibles
		Monopoly costs and benefits

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

		market concentration ratio
		Herfindahl-Hirschman index
		correlation coefficient
		standard deviation of concentration

In determining the optimal capital budget, one should choose those project's whose ____ exceeds the firm's ____ cost of capital.

		internal rate of return, average
		internal rate of return, marginal
		internal rate of return, historic
		average rate of return, marginal

Any current outlay that is expected to yield a flow of benefits beyond one year in the future is:

		a capital gain
		a wealth maximizing factor
		a capital expenditure
		a cost of capital
		a dividend reinvestment

The decision by the Municipal Transit Authority to either refurbish existing buses, buy new large buses, or to supplement the existing fleet with mini-buses is an example of:

		independent projects
		mutually exclusive projects
		contingent projects
		separable projects

Capital expenditures:

		are easily reversible
		are forms of operating expenditures
		Affect long-run future profitability
		Involve only money, not machinery

In the constant-growth dividend valuation model, the required rate of return on common stock (i.e., cost of equity capital) can be shown to be equal to the sum of the dividend yield plus the ____.

		yield-to-maturity
		present value yield
		risk-free rate
		dividend growth rate