Exam 15: Managerial Decisions About Information

In the absence of patent rights, society can still achieve the optimal amount of innovation.

-_______ term forecasts are more valuable if a firm's demand changes very frequently and changes in the firm's output level have a ________ effect on its marginal cost.

Suppose the U.S. government is auctioning the rights to mine for gold in a government- owned region on the West coast. Gold has been found in areas close to the region to be auctioned and gold has a fixed market price. The value of the rights to mine for gold in this region is an example of_______ .

Trade secrets do not need governmental approval to protect it.

A creator of an action movie who wants to protect their intellectual property would apply for which of the following?

All of the following are true regarding moral hazard except which one?

The local government is holding an auction for a contract to build a new multi- deck parking lot downtown. If the government has a policy to release its own cost estimates of the work to the auction participants, the participants will have ________ confidence in their own cost estimates and will submit_______ bids.

If restaurant managers have a policy that servers' tips are to be combined and then shared equally at the end of the day, this will incentivize all servers to to take the best care of their customers.

A creator of a sculptural work who wants to protect their intellectual property would apply for which of the following?

When bidders values of an item in an auction are correlated, buyers of an item will _______ their bids and sellers will _______their bids to avoid the winner's curse.

A very high grade point average (GPA)is an example of ________.

Fresh Air is a large company that repairs residential air conditioners in many homes spread across a state. The company has 50 employees who each have their own repair van. Because the managers of Fresh Air cannot monitor every employee on every repair job, the company sends a satisfaction score card to each customer asking them how pleased they are with the service. If an employee receives a high satisfaction score, the employee receives a bonus. The bonus policy incentives the employees to do all of the following to earn a high satisfaction score except which one?

Suppose managers of an art auction house are going to auction a painting that is believed to be painted by a famous artist. If the managers of the auction are able to provide evidence that the painting was created by the famous artist, the participants in the auction will have _______confidence in their own valuation of the painting and will submit_______ bids.

If certification decreases supply and serves as a barrier to entry, it _______the price and _______market power of the suppliers already in the market.

In general, moral hazard occurs at the time of the transaction and adverse selection occurs after the participants have already entered into the contract or agreement.

If a firm's demand is subject to random fluctuations, the firm's ________ will also be random.

Suppose a home owner is selling their home and they are aware that the basement has a severe drainage problem and the potential buyers do not have this information. This is an example of_______ .

The lemons problem is associated with _________ and results in a market for items with only _______characteristics.

The more variable a firm's demand, the _______the loss from uncertainty, which means the firm has_______ _ to gain from a forecast.

A well- known company's trademark is an example of a signal.