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economics questions




Question;Question1;The more bidders;there are at an oral auction;Select one;a. the;less each bidder will shade his bid;b. the higher the;expected selling price;c. the;higher each bidder bids;d. the longer that;each bidder will continue to bid;Question2;You are bidding in a;second-price auction for a painting that you value at $800. You estimate that;other bidders are most likely to value the painting at between $200 and $600.;Which of these is likely to be your best bid?;Select one;a.;$800;b. $1,000;c.;$400;d. $600;Question3;The optimal bidding;strategy for an oral auction is;Select one;a. To;bid drop out when the bidding exceeds your true value;b. To size up your;competition to determine how much to shade your bid;c. To;shade your bid below your true value and drop out just when the shaded amount;is reached;d. To shade your bid;below your true value and drop out well before it is reached;Question4;This factor;contributes to the winner's curse;Select one;a.;Your estimate of the value of the object was not the most optimistic;b. There were not;many other bidders you had to beat out;c.;Your bid was the highest;d. You did not shade;your bid enough;Question5;To attract more;bidders, and more aggressive bidders, to your auction;Select one;a.;Don't allow bidders to know how others are bidding;b. Hold oral;auctions;c.;Don't allow potential bidders to examine the object too closely;d. Withhold relevant;information about the value of the object;Question6;An employer faces;two types of employees. Regular workers are 70% of the population and generate;$100,000 in productivity. Exceptional workers are 30% of the population, and;generate $120,000 in productivity. Employees know their types, and reject;salaries below their productivity. If the employer offers a salary equal to the;average productivity in the population, what will be the employer?s;per-employee profit?;Select one;a.;$10,000;b. $6,000;c.;$4,000;d. $0;Question7;Adverse selection in;insurance implies that;Select one;a.;People are not risk averse;b. All people face;the same risk;c.;Insurers cannot tell higher risk people from lower risk people;d. Potential;customers facing more risk are no more interested in purchasing insurance;Question8;When a home in Lake;George went up for sale, the person interested in buying a home wanted to have;the house inspected. The person selling the home encouraged the buyer to;inspect the house before the sale is final.;Which statement is;true?;Select one;a. The;buyer is signaling;b. The buyer is;trying to solve the problem of adverse selection;c.;None of the above;d. The seller is;screening;Question9;Individuals who face;greater risks;Select one;a. Are;neither more nor less likely to purchase insurance;b. Are more likely;to purchase insurance;c. Are;risk neutral;d. Are less likely;to purchase insurance;Question10;Which is NOT;an example of signaling high quality in a social setting;Select one;a.;Doing messy chores before a big date;b. Leaving a big tip;for the waiter after a dinner date;c.;Wearing a business suit on a job interview;d. Offering an;expensive engagement ring to your bride;Question11;APC offers an;extended warranty for its product that is purchased by a few customers.;If the product;typically fails 2% of the time;Select one;a.;Cannot tell from this information;b. APC should price;the warranty at less than 2% of the product price;c. APC;should price the warranty at exactly 2% of the product price;d. APC should price;the warranty at more than 2% of the product price;Question12;A salesperson can;put in regular effort (resulting in a 40% chance of sale) or high effort (60%;chance of sale). If high effort costs the salesperson $20 more than regular;effort, how large of a per-sale bonus is required to encourage high effort?;Select one;a.;$100.00;b. $20.00;c.;$12.00;d. $33.33;Question13;Which of the;following is an example of moral hazard?;Select one;a.;After employees sign up for the company health plan that covers all doctors?;visits, they start going to the doctor every time they get a cold;b. Reckless drivers;are the ones most likely to buy automobile insurance;c.;Retail stores located in high-crime areas tend to buy theft insurance more;often than stores located in low-crime areas;d. Drivers who have;many accidents prefer to buy cars with air bags;Question14;In a bad economy, a;CEO has a 4% chance of meeting earnings estimates at regular effort, and a 6%;at extraordinary effort. Extraordinary effort costs the CEO $10,000 in extra;effort. How a large of a bonus should the CEO be paid for meeting estimates to;encourage extraordinary effort?;Select one;a.;$200,000;b. $250,000;c.;$100,000;d. $500,000;Question15;The difference;between moral hazard and adverse selection is;Select one;a.;Moral hazard has to do with unobservable characteristics of individuals;b. Adverse selection;is when you choose the wrong answer on a test;c.;Moral hazard has to do with unobservable actions of individuals;d. Adverse selection;is when individuals change their behavior because of a contract


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