Exam 15: Managerial Decisions About Information

A perfect forecast of demand allows a profit- maximizing manager to produce where _______marginal revenue is _______the marginal cost.

Suppose Happy Cows has a marginal cost equal to 0.5Q and Free Cows has a marginal cost equal to 2Q.

In a correlated- value auction, the unknown, true value of the auction item is the same for all bidders.

In order for a patent to be considered useful, it must meet which of the two criteria?

A large timber farm supplies large building contractors with plywood and stick lumber. The managers of the timber farm have noticed that the demand for their timber tends to fluctuate with long- term business cycles and short- term changes in their timber production lead to sharp increases in their marginal cost. With this information, it is likely that _______- term forecasts are more valuable to the managers of the timber farm and the cost of _______- term forecasts are likely to exceed their benefit.

If an employer calls an applicant's prior employer to inquire about their work ethic, this is an example of _______.

The greater the accuracy of a forecast, the _______its value as the firm faces a_______ increase in expected profit.

In an independent private values Dutch auction, the more bidders there are in the auction, the_______ the next- highest valuation and the _______each participant should reduce their bid.

If a perfectly competitive firm has a 70 percent probability of a high demand of $5 and a 30 percent chance of a low demand of $4, what is the firm's expected marginal revenue?

If the ________ of a forecast outweighs its ________, the forecast can a firm's profit.

If an insurance company underestimates the number of high- cost customers, it is likely to face_______ .

Suppose a trade secret's owner has successfully proven in court that an infringer has illegally used the trade secret. If the trade secret's owner has lost $10 million in profits because of the infringement and the infringer has earned $6 million in profit as a result of illegally using the trade secret, the trade secret's owner will be awarded_______ .

All else equal, the flatter the marginal cost curve, the ________ sensitive quantity produced is to changes in demand and, thus the_______ valuable an accurate forecast is to the firm.

Happy Cows is a perfectly competitive dairy farm with a 50 percent chance of a high demand of $5 and a 50 percent chance of a low demand of $4. Free Cows is a perfectly competitive dairy farm with a 50 percent chance of a high demand of $6 and a 50 percent chance of a low demand of $3. Which of the following statements is true?

Asymmetric information is a situation in which ________ parties to a transaction have relevant private information that is_______ to the other parties.

Suppose a copyright's owner has successfully proven in court that an infringer has illegally reproduced the copyrighted material. If the copyright's owner has lost $8 million in profits because of the infringement and the infringer has earned $5 million in profit as a result of illegally reproducing the copyrighted material, the copyright's owner will be awarded_______ .

All else equal, a forecast regression with a R2 of_______ is more valuable than a forecast regression with a R2 of _______.