Question 1

Externalities exist when the actions of one agent:

Accepted Answer

A)  benefit or hurt another agent who is not part of the exchange relationship. 
B)  hurts the agent committing the action 
C)  benefits the agent committing the action 
D)  benefit or hurt another agent who is a part of the exchange relationship 
A)  benefit or hurt another agent who is not part of the exchange relationship. 
B)  hurts the agent committing the action 
C)  benefits the agent committing the action 
D)  benefit or hurt another agent who is a part of the exchange relationship

Question 2

If the price of movie tickets doubles, then:

Accepted Answer

A)  the demand for DVDs is likely to increase. 
B)  the price of DVDs is likely to decrease. 
C)  the quantity of movie tickets sold is likely to increase. 
D)  More popcorn will be sold 
A)  the demand for DVDs is likely to increase. 
B)  the price of DVDs is likely to decrease. 
C)  the quantity of movie tickets sold is likely to increase. 
D)  More popcorn will be sold

Question 3

A price ceiling will usually:

Accepted Answer

A)  shift both demand and supply to the right 
B)  shift both demand and supply to the left 
C)  shift demand to the left and supply to the right 
D)  shift neither demand nor supply 
A)  shift both demand and supply to the right 
B)  shift both demand and supply to the left 
C)  shift demand to the left and supply to the right 
D)  shift neither demand nor supply

Question 4

A business manager has to decide whether to buy supplies in the marketplace or whether to build them inside the company. What do "information" and "contracting" have to do with this decision?

Accepted Answer

Contracting costs and the costs of acqui

Question 5

Currently XYZ's compensation system is such that only top managers receive compensation based on the company's performance, while everybody else in the company receives a fixed salary. Moreover, top managers have full discretion over the launch of new products. Due to the failure of the last three products launched by XYZ, top managers are contemplating modifying the allocation of decision rights concerning new products. What changes would make more economic sense?

Accepted Answer

A)  Delegating decision rights down the ladder to those employees who are likely to have more specific knowledge, and leaving their current compensation scheme unchanged. 
B)  Delegating decision rights down the ladder to those employees who are likely to have more specific knowledge, and changing their compensation by awarding them bonuses based on their performance. 
C)  Leaving the allocation of decision rights unchanged, but changing the compensation of all the employees by awarding them bonuses based on their performance. 
D)  Give themselves good bonuses and reduce benefits for all employees. 
A)  Delegating decision rights down the ladder to those employees who are likely to have more specific knowledge, and leaving their current compensation scheme unchanged. 
B)  Delegating decision rights down the ladder to those employees who are likely to have more specific knowledge, and changing their compensation by awarding them bonuses based on their performance. 
C)  Leaving the allocation of decision rights unchanged, but changing the compensation of all the employees by awarding them bonuses based on their performance. 
D)  Give themselves good bonuses and reduce benefits for all employees.

Question 6

The minimum wage:

Accepted Answer

A)  increases economic efficiency. 
B)  creates a shortage of labor. 
C)  creates a surplus of labor. 
D)  increases producer surplus. 
A)  increases economic efficiency. 
B)  creates a shortage of labor. 
C)  creates a surplus of labor. 
D)  increases producer surplus.

Question 7

Which of the following constitute examples of positive externalities:

Accepted Answer

A)  Your neighbor's garden is always well taken care of. 
B)  Your neighbor's barbecue smoke coming through your window. 
C)  Your neighbor always listening to music at an unbearable volume. 
D)  You allow weeds to grow in your yard 
A)  Your neighbor's garden is always well taken care of. 
B)  Your neighbor's barbecue smoke coming through your window. 
C)  Your neighbor always listening to music at an unbearable volume. 
D)  You allow weeds to grow in your yard

Question 8

Draw supply and demand curves. Show the impact of an increase in demand. What happens to the price and quantity exchanged in the market? Show the impact of a decrease in demand. What happens to the price and quantity exchanged in the market?

Accepted Answer

When there is an increase in demand, the

Question 9

Let D0 be the initial demand curve for gasoline. Which one of the following does not shift this curve?

Accepted Answer

A)  an increase in the amount of alternative fuels 
B)  an increase in gas tax 
C)  an increase in the price of gasoline 
D)  an increase in oil imports from the Gulf 
A)  an increase in the amount of alternative fuels 
B)  an increase in gas tax 
C)  an increase in the price of gasoline 
D)  an increase in oil imports from the Gulf

Question 10

Let D0 and S0 be the initial demand and supply curves for gasoline. Let P0* and Q0* be the initial equilibrium in this market. There is an increase in incomes due to a tech boom. Which ONE of the following correctly captures the effect of this change on the market for gasoline?

Accepted Answer

A)  Both equilibrium quantity and price will increase 
B)  Both equilibrium quantity and price will decrease 
C)  Equilibrium quantity will increase, but equilibrium price will decrease 
D)  Equilibrium quantity will decrease, but equilibrium price will increase 
A)  Both equilibrium quantity and price will increase 
B)  Both equilibrium quantity and price will decrease 
C)  Equilibrium quantity will increase, but equilibrium price will decrease 
D)  Equilibrium quantity will decrease, but equilibrium price will increase

Question 11

Let D0 and S0 be the initial demand and supply curves for gasoline. Let P0* and Q0* be the initial equilibrium in this market. The war in Iraq comes to an end. Iran and Afghanistan lay pipes to generate more oil. US and Venezuela enter an era of friendship. Which ONE of the following correctly captures the effect of this change on the market for gasoline?

Accepted Answer

A)  Both equilibrium quantity and price will increase 
B)  Both equilibrium quantity and price will decrease 
C)  Equilibrium quantity will increase, but equilibrium price will decrease 
D)  Equilibrium quantity will decrease, but equilibrium price will increase 
A)  Both equilibrium quantity and price will increase 
B)  Both equilibrium quantity and price will decrease 
C)  Equilibrium quantity will increase, but equilibrium price will decrease 
D)  Equilibrium quantity will decrease, but equilibrium price will increase

Question 12

Assume the market for hammers is perfectly competitive, and the current price is $15. If, at this price, the quantity of hammers demanded is 15,000, while the quantity supplied is 25,000, then:

Accepted Answer

A)  the market for hammers is in equilibrium. 
B)  the price of hammers is likely to increase. 
C)  the price of hammers is likely to decrease. 
D)  there would be no change in price 
A)  the market for hammers is in equilibrium. 
B)  the price of hammers is likely to increase. 
C)  the price of hammers is likely to decrease. 
D)  there would be no change in price

Question 13

The minimum wage is a:

Accepted Answer

A)  wage ceiling. 
B)  positive externality. 
C)  price floor. 
D)  price ceiling. 
A)  wage ceiling. 
B)  positive externality. 
C)  price floor. 
D)  price ceiling.

Question 14

Let Qd = 10 - 2 P and Qs = 3 P be the demand and supply curves for Beer. Then the equilibrium combination in the market is:

Accepted Answer

A)  P* = 2; Q* = 5 
B)  P* = 5; Q* = 0 
C)  P* = 2; Q* = 6 
D)  P* = 6; Q* = 2 
A)  P* = 2; Q* = 5 
B)  P* = 5; Q* = 0 
C)  P* = 2; Q* = 6 
D)  P* = 6; Q* = 2

Question 15

A bunch of elementary school kids sit down at a long lunch table. For several minutes, everyone trades food, but then the table becomes quiet as they begin to eat. What happened?

Accepted Answer

As long as there are additiona

Question 16

A competitive equilibrium price guarantees that:

Accepted Answer

A)  consumers who want to buy the product at the market price are satisfied. 
B)  producers can hoard the quantity they want to at the current market price. 
C)  gains from trade are maximized only by the produces. 
D)  you can get whatever you want 
A)  consumers who want to buy the product at the market price are satisfied. 
B)  producers can hoard the quantity they want to at the current market price. 
C)  gains from trade are maximized only by the produces. 
D)  you can get whatever you want

Question 17

The demand and supply curves in the market for gasoline are illustrated in the graph below.   Starting at the equilibrium point, if the government then imposes a price ceiling of $10, producer surplus will fall by an amount given by the area:

Accepted Answer

A)  A 
B)  B + C 
C)  B + E 
D)  C 
A)  A 
B)  B + C 
C)  B + E 
D)  C

Question 18

Let D0 and S0 be the initial demand and supply curves for gasoline. Let P0* and Q0* be the initial equilibrium in this market. There is an OPEC cartel that reduces the production of world oil by several million barrels a day. Which ONE of the following correctly captures the effect of this change on the market for gasoline?

Accepted Answer

A)  Both equilibrium quantity and price will increase 
B)  Both equilibrium quantity and price will decrease 
C)  Equilibrium quantity will increase, but equilibrium price will decrease 
D)  Equilibrium quantity will decrease, but equilibrium price will increase 
A)  Both equilibrium quantity and price will increase 
B)  Both equilibrium quantity and price will decrease 
C)  Equilibrium quantity will increase, but equilibrium price will decrease 
D)  Equilibrium quantity will decrease, but equilibrium price will increase

Question 19

MACROSOFT's top management is contemplating the development and marketing of three new software products (a word processor, a spreadsheet application, and a web browser). However, it needs to decide whether to launch them separately or as a package. The CEO proposes to delegate the decision to a team formed with representatives from each department. Why does his proposal make economic sense?

Accepted Answer

A)  Ultimately, they are the ones who have to implement whatever decision is made, so one might as well ask their opinion. 
B)  They are likely to make a more informed decision. 
C)  So that their in-fighting will be advantage to the management 
D)  So if the project fails, they can blame each other 
A)  Ultimately, they are the ones who have to implement whatever decision is made, so one might as well ask their opinion. 
B)  They are likely to make a more informed decision. 
C)  So that their in-fighting will be advantage to the management 
D)  So if the project fails, they can blame each other

Question 20

Assume the market for ceiling fans is perfectly competitive and currently in equilibrium. If the demand increases while the supply decreases, then:

Accepted Answer

A)  we can be certain the equilibrium price will increase. 
B)  we can be certain the equilibrium quantity will increase. 
C)  Both price and quantity will increase 
D)  Both price and quantity will decrease 
A)  we can be certain the equilibrium price will increase. 
B)  we can be certain the equilibrium quantity will increase. 
C)  Both price and quantity will increase 
D)  Both price and quantity will decrease

Externalities exist when the actions of one agent:

If the price of movie tickets doubles, then:

A price ceiling will usually:

A business manager has to decide whether to buy supplies in the marketplace or whether to build them inside the company. What do "information" and "contracting" have to do with this decision?

The minimum wage:

Which of the following constitute examples of positive externalities:

Draw supply and demand curves. Show the impact of an increase in demand. What happens to the price and quantity exchanged in the market? Show the impact of a decrease in demand. What happens to the price and quantity exchanged in the market?

Let D₀ be the initial demand curve for gasoline. Which one of the following does not shift this curve?

Let D₀ and S₀ be the initial demand and supply curves for gasoline. Let P₀^* and Q₀^* be the initial equilibrium in this market. There is an increase in incomes due to a tech boom. Which ONE of the following correctly captures the effect of this change on the market for gasoline?

Assume the market for hammers is perfectly competitive, and the current price is $15. If, at this price, the quantity of hammers demanded is 15,000, while the quantity supplied is 25,000, then:

The minimum wage is a:

Let Qd = 10 - 2 P and Qs = 3 P be the demand and supply curves for Beer. Then the equilibrium combination in the market is:

A bunch of elementary school kids sit down at a long lunch table. For several minutes, everyone trades food, but then the table becomes quiet as they begin to eat. What happened?

A competitive equilibrium price guarantees that:

The demand and supply curves in the market for gasoline are illustrated in the graph below. Starting at the equilibrium point, if the government then imposes a price ceiling of $10, producer surplus will fall by an amount given by the area:

Assume the market for ceiling fans is perfectly competitive and currently in equilibrium. If the demand increases while the supply decreases, then:

Introduction

Economists View of Behavior

Demand

Production and Cost

Market Structure

Pricing With Market Power

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: The Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: The Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

Filters

Exam 3: Markets, Organizations, and the Role of Knowledge

Externalities exist when the actions of one agent:

If the price of movie tickets doubles, then:

A price ceiling will usually:

A business manager has to decide whether to buy supplies in the marketplace or whether to build them inside the company. What do "information" and "contracting" have to do with this decision?

The minimum wage:

Which of the following constitute examples of positive externalities:

Draw supply and demand curves. Show the impact of an increase in demand. What happens to the price and quantity exchanged in the market? Show the impact of a decrease in demand. What happens to the price and quantity exchanged in the market?

Let D0 be the initial demand curve for gasoline. Which one of the following does not shift this curve?

Let D0 and S0 be the initial demand and supply curves for gasoline. Let P0* and Q0* be the initial equilibrium in this market. There is an increase in incomes due to a tech boom. Which ONE of the following correctly captures the effect of this change on the market for gasoline?

Assume the market for hammers is perfectly competitive, and the current price is $15. If, at this price, the quantity of hammers demanded is 15,000, while the quantity supplied is 25,000, then:

The minimum wage is a:

Let Qd = 10 - 2 P and Qs = 3 P be the demand and supply curves for Beer. Then the equilibrium combination in the market is:

A bunch of elementary school kids sit down at a long lunch table. For several minutes, everyone trades food, but then the table becomes quiet as they begin to eat. What happened?

A competitive equilibrium price guarantees that:

The demand and supply curves in the market for gasoline are illustrated in the graph below. Starting at the equilibrium point, if the government then imposes a price ceiling of $10, producer surplus will fall by an amount given by the area:

Assume the market for ceiling fans is perfectly competitive and currently in equilibrium. If the demand increases while the supply decreases, then:

Introduction

Economists View of Behavior

Demand

Production and Cost

Market Structure

Pricing With Market Power

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: The Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: The Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

Filters

Let D₀ be the initial demand curve for gasoline. Which one of the following does not shift this curve?

Let D₀ and S₀ be the initial demand and supply curves for gasoline. Let P₀^* and Q₀^* be the initial equilibrium in this market. There is an increase in incomes due to a tech boom. Which ONE of the following correctly captures the effect of this change on the market for gasoline?