ECON 308 Midterm study guide part 2

2. In the Game below Hansel picks the rows (either A or B) and Gretel picks the columns (either C or D). Statement 1: "Hansel has a dominant strategy." Statement 2: "Gretel has a dominant strategy." a. Statement 1 is true, but 2 is false b. Statement 2 is true, but 1 is false c. Both statements are true d. Both statements are false

a

4. Statement 1: "According to economists, firms that have found a good way to create value by generating profit in their market will nearly always be able to generate similar levels of profit for the next several years." Statement 2: "According to economists reducing consumer borne transactions cost often increases customer interest in the firm, but this rarely is translated into unusually high profit." a. Both statements are false b. Both statements are true c. Statement 2 is true, but 1 is false d. Statement 1 is true, but 2 is false

a

5. Statement 1: "Firms using the efficiency wage approach and firms using internal labor markets have different methods of paying their employees, but in both cases, it is likely that employees will stay with the firm for a large part of their career." Statement 2: "Firms using the internal labor markets approach sometimes find that employee make destructive comments about other employees to manipulate promotions." a. Both statements are true b. Both statements are false c. Statements 2 is true, but 1 is false d. Statement 1 is true, but 2 is false

a

7. Statement 1: "As a general rule, economists believe that firms entering a market first have a large advantage on those entering later." Statement 2: "Sequential games are best solved by beginning with the first move, and then reasoning sequential from the first move to the last move. a. Both statements are false b. Statement 1 is true, but 2 is false c. Statement 2 is true, but 1 is false d. Both statements are true

a

8. Statement 1: "Firms using internal labor markets do not have to pay attention to what salaries are offered by other employers." Statement 2: "Firms with internal labor market tend to have fewer problems with employees saying bad things about the firm to outsiders than is common with other firms." a. Statement 2 is true, but 1 is false b. Both statements are false c. Statement 1 is true, but 2 is false d. Both statements are true

a

9. Statement 1: "In a sequential game it is usually easier to solve for the likely outcome by examining the end of the game initially and working backwards through the decisions." Statement 2: "Despite common belief, game theory suggest that the second mover usually has the advantage in a sequential game." a. Statement 1 is true, but 2 is false b. Both statements are false c. Both statements are true d. Statement 2 is true, but 1 is false

a

Question 10 Statement 1: "According to economists, a company that diversifies into a new business producing a complementary product may often experience an increase in its profitability." Statement 2: "Diversifying into a new business that exhibits strong economies of scale is typically recommended by economists." Group of answer choices a. Statement 1 is true, but 2 is false b. Both statements are false. c. Statement 2 is true, and 1 is false d. Both statements are true

a

Question 1 Statement 1: "Your firm has had problems with sales people telling lies to customer. You have hired a consultant named Phil to help assess the problem and give you advice. Phil did some research and found that your staff is nearly 4 times more likely to mislead customers than is normal in your industry. He recommends that you send employees an email appealing to your employee's common beliefs about the value of telling the truth and point out that at the moment this firm tells lies to the customers much more than other firms. He suggests you attach his research summary of his employee truth-telling research results. It is likely that Phil is using the "product of the environment" approach to solving business problems. Statement 2: "Your firm has another problem: many employees are lazy and unproductive. You've hired a consultant named Anya to help assess the problem. Anya arranges for focus groups with different groups of workers and sends out surveys designed to discover employee complaints about their job. In the end she identifies three common employee concerns that are inexpensive to fix and recommends that you make those changes. Anya is using the "happy is productive" approach to solving business problems. Group of answer choices a. Both statements are true b. Statement 2 is true, and 1 is false c. Statement 1 is true, but 2 is false d. Both statements are false.

b

Question 3 Statement 1: "One important characteristic of the short run is that firms in other industries do not yet have time to copy your firm's strategy and compete with you even when it is profitable to do so." Statement 2: "When a micro-economist refers to the 'short run' he/she means a period of about 2 years." Group of answer choices a. Both statements are true b. Statement 1 is true, but 2 is false c. Statement 2 is true, and 1 is false d. Both statements are false

b

Question 5 Statement 1: "In a non-cooperative Nash equilibrium each player tries to make themselves as well off as they can given their beliefs about the behavior of other players. In equilibrium player beliefs about other players strategies are often inconsistent with the way their opponents actually made their decisions." Statement 2: "There is always at least one Nash equilibrium in pure strategies." Group of answer choices a. Statement 2 is true, and 1 is false b. Both statements are false. c. Statement 1 is true, but 2 is false d. Both statements are true

b

Question 8 Statement 1: "A employees hired by a firm on the spot market will usually spend most of their career with that firm." Statement 2: "Firms using the internal labor market approach to hiring will typically pay employees slightly more than they have to throughout the employee's career." Group of answer choices a. Statement 2 is true, and 1 is false b. Both statements are false. c. Both statements are true d. Statement 1 is true, but 2 is false

b

Question 9 Statement 1: "Economists think that fringe benefits are never a good idea if the government does not exempt them from payroll taxes." Statement 2: "Economists think that it is never profitable for a firm to use cafeteria style fringe benefits." Group of answer choices a. Statement 1 is true, but 2 is false b. Both statements are false. c. Statement 2 is true, and 1 is false d. Both statements are true

b

1. Which of the following is not an investment in human capital? a. Getting an undergraduate degree in business with a focus on management. b. Learning how to work with spreadsheets c. Learning your company's new accounting system d. All of the above are investments in human capital

d

4. Statement 1: "Firms using efficiency wages tend to have employees that stay with the firm for a large fraction of their careers." Statement 2: "Firms using efficiency wages make heavy use of incentive pay to get the most out of their employees." a. Both statements are false b. Both statements are true c. Statement 2 is true, but 1 is false d. Statement 1 is true, but 2 is false

d

6. Which of the following is not a method suggested by economist for increasing a firm's value in the short run? a. Reducing firm transactions cost (Chapter 8) b. Reducing consumer transactions cost c. Working to increase the price of substitute products d. All the above are methods suggested by economists for increasing a firm's value in the short run.

d

Question 2 Statement 1: "The only barrier to entry discussed by economists is protection by a patent for your firm's technology." Statement 2: "Firm's can sometimes have significant economies of scale that make it very difficult for other firms to compete with them." Group of answer choices a. Both statements are true b. Statement 1 is true, but 2 is false c. Both statements are false. d. Statement 2 is true, and 1 is false

d

Question 4 Statement 1: "If an industry has no barriers to entry, most economists believe that accounting profit will be zero in the long run." Statement 2: "When accounting profit is zero, economic profit is always positive." Group of answer choices a. Both statements are true b. Statement 2 is true, and 1 is false c. Statement 1 is true, but 2 is false d. Both statements are false.

d

Question 6 Jack and Jill went up the hill and took a great spill down the hill. After recovering from minor concussions, they each realized they couldn't find the other. Now each of them is making a simultaneous choice to either "go up the hill", "down the hill", or stay where they are. The table below describes the payoffs to each of them. Jill picks the columns and Jack picks the rows. Numbers followed by a * are payoffs to Jack and numbers followed by ** are payoffs to Jill. Statement 1: "Jill has a dominant strategy." Statement 2: "Using the approach developed in class Jack should decide not to move." Group of answer choices a. Both statements are false. b. Statement 2 is true, and 1 is false c. Statement 1 is true, but 2 is false d. Both statements are true

d