Question 1

What is economic value of an exchange?

Accepted Answer

Economic value of an exchange

Question 2

Which of the following statements is true regarding protocols in various types of auctions?

Accepted Answer

A) An English auction requires bidders to begin with the highest price. 
B) A Dutch auction starts with the lowest price any bidder is willing to pay, which is displayed in a one-handed clock. 
C) In a Dutch auction, the first buyer to bid gets the item at the price shown in the one-handed clock. 
D) In a second-price auction, the second-highest bidder gets the item. 
A) An English auction requires bidders to begin with the highest price. 
B) A Dutch auction starts with the lowest price any bidder is willing to pay, which is displayed in a one-handed clock. 
C) In a Dutch auction, the first buyer to bid gets the item at the price shown in the one-handed clock. 
D) In a second-price auction, the second-highest bidder gets the item.

Question 3

Suppose a seller's opportunity cost matches a buyer's valuation of the product.Assuming a two-person economy, which of the following statements will be true?

Accepted Answer

A) The transaction will benefit the buyer, while the seller will neither gain nor lose from it. 
B) The economic value created by this exchange will be zero. 
C) Both parties will be worse-off after the transaction. 
D) The seller will be worse-off than the buyer after the transaction. 
A) The transaction will benefit the buyer, while the seller will neither gain nor lose from it. 
B) The economic value created by this exchange will be zero. 
C) Both parties will be worse-off after the transaction. 
D) The seller will be worse-off than the buyer after the transaction.

Question 4

Identify some of the possible transactions costs involved in an exchange of a used car between two individuals.

Accepted Answer

Transaction costs include the costs incu

Question 5

Brandon finds that Max Solutions can supply computers with the specific configuration he needs.His company enters into a contract with Max Solutions to provide 60 custom-built desktops at an agreed price.The contract between them will ensure each of the following, EXCEPT:

Accepted Answer

A) that Brandon's company does not back out and make a deal with someone else for a lower price. 
B) Max Solutions does not sell the computers to another company for a higher price. 
C) Max Solutions supplies the computers before the scheduled date of delivery. 
D) Brandon's company compensates Max Solutions in case of cancellation of order at a later date. 
A) that Brandon's company does not back out and make a deal with someone else for a lower price. 
B) Max Solutions does not sell the computers to another company for a higher price. 
C) Max Solutions supplies the computers before the scheduled date of delivery. 
D) Brandon's company compensates Max Solutions in case of cancellation of order at a later date.

Question 6

Fiona can iron 5 shirts or cook 2 meals in an hour.Alicia can iron 6 shirts or cook 1 meal in an hour.Which of the following statements is true?

Accepted Answer

A) Fiona's marginal cost of ironing a shirt is greater than Alicia's. 
B) Alicia's marginal cost of ironing a shirt is greater than Fiona's. 
C) Alicia's marginal cost of cooking a meal is twice that of Fiona's. 
D) Fiona's marginal cost of cooking a meal is twice that of Alicia's. 
A) Fiona's marginal cost of ironing a shirt is greater than Alicia's. 
B) Alicia's marginal cost of ironing a shirt is greater than Fiona's. 
C) Alicia's marginal cost of cooking a meal is twice that of Fiona's. 
D) Fiona's marginal cost of cooking a meal is twice that of Alicia's.

Question 7

Mention the factors which have helped South Africa's electricity supplier, Eskom, to reduce transaction costs and distribute electricity cheaply?

Accepted Answer

South Africa's electricity supplier, Esk

Question 8

Suppose a buyer and a seller agree to split the cost of hiring an interpreter who charges $4 per transaction.The seller's opportunity cost is $35, while the buyer values the good at $45.If the gains from this transaction are split equally between the buyer and the seller, how much will each gain from this transaction?

Accepted Answer

A) $10 
B) $4 
C) $3 
D) $5 
A) $10 
B) $4 
C) $3 
D) $5

Question 9

Jake can wash 6 cars or mow 3 lawns during the same time.His marginal cost of washing a car is:

Accepted Answer

A) mowing one-third lawn. 
B) mowing half a lawn. 
C) mowing one lawn. 
D) mowing 2 lawns. 
A) mowing one-third lawn. 
B) mowing half a lawn. 
C) mowing one lawn. 
D) mowing 2 lawns.

Question 10

Price tags reduce transaction costs in countries where people's time is more valuable.

Accepted Answer

A) True 
 B)False

Question 11

Explain how the development of telecommunications has made cities like Bangalore and Omaha important locations for the development of service trade?

Accepted Answer

Telecommunications have increased the va

Question 12

Which of the following statements is true regarding the opportunity cost of time?

Accepted Answer

A) Retired people are more likely to visit supermarkets than farmers' markets. 
B) Students are more likely to visit farmers' markets even during exams. 
C) Working professionals are more likely to frequent convenience stores. 
D) The opportunity cost of time for farmers and buyers participating in the farmers' market is usually very high. 
A) Retired people are more likely to visit supermarkets than farmers' markets. 
B) Students are more likely to visit farmers' markets even during exams. 
C) Working professionals are more likely to frequent convenience stores. 
D) The opportunity cost of time for farmers and buyers participating in the farmers' market is usually very high.

Question 13

Prices play a smaller role in _____, in contrast to other modes of governance like _____ and _____.

Accepted Answer

A) hierarchies; markets; contracts 
B) contracts; hierarchies; markets 
C) markets; hierarchies; contracts 
D) etiquette; markets; contracts 
A) hierarchies; markets; contracts 
B) contracts; hierarchies; markets 
C) markets; hierarchies; contracts 
D) etiquette; markets; contracts

Question 14

If you have a comparative advantage in producing a good, it implies:

Accepted Answer

A) you have a lower marginal cost of producing that good. 
B) you have a higher marginal cost of producing that good. 
C) you have a lower total cost of producing that good. 
D) you have a higher total cost of producing that good. 
A) you have a lower marginal cost of producing that good. 
B) you have a higher marginal cost of producing that good. 
C) you have a lower total cost of producing that good. 
D) you have a higher total cost of producing that good.

Question 15

What is the marginal cost rule of specialization?

Accepted Answer

The marginal cost rule of spec

Question 16

When the slope of a country's production set declines, it implies:

Accepted Answer

A) the production set has shrunk. 
B) the marginal cost of producing the good measured on the Y-axis has fallen. 
C) the marginal cost of producing the good measured on the Y-axis has increased. 
D) the marginal cost of producing the good measured on the X-axis has fallen. 
A) the production set has shrunk. 
B) the marginal cost of producing the good measured on the Y-axis has fallen. 
C) the marginal cost of producing the good measured on the Y-axis has increased. 
D) the marginal cost of producing the good measured on the X-axis has fallen.

Question 17

Which of the following statements is true of contracts?

Accepted Answer

A) They are used only in case of standardized transactions. 
B) They protect a seller's investment in the transaction. 
C) They allow the concerned parties to benefit from short-term price fluctuations in the market. 
D) They reduce the impact of market risk on the transaction as well as economic value in the long run. 
A) They are used only in case of standardized transactions. 
B) They protect a seller's investment in the transaction. 
C) They allow the concerned parties to benefit from short-term price fluctuations in the market. 
D) They reduce the impact of market risk on the transaction as well as economic value in the long run.

Question 18

Why should an economy specialize and trade according to its marginal cost advantage or comparative advantage?

Accepted Answer

Individuals and nations should specializ

Question 19

The closer the exchange price is to the valuation of the buyer, the greater the buyer's share of the economic value created by the exchange.

Accepted Answer

A) True 
 B)False

Question 20

If the transaction between you and the seller takes place at a price that equals your valuation of the product, then:

Accepted Answer

A) you realize all the gains from this transaction. 
B) the gains from this transaction are equally divided between the two of you. 
C) the entire economic value created by the transaction goes to the seller. 
D) the economic value created by this transaction is sub-optimal. 
A) you realize all the gains from this transaction. 
B) the gains from this transaction are equally divided between the two of you. 
C) the entire economic value created by the transaction goes to the seller. 
D) the economic value created by this transaction is sub-optimal.

What is economic value of an exchange?

Which of the following statements is true regarding protocols in various types of auctions?

Suppose a seller's opportunity cost matches a buyer's valuation of the product.Assuming a two-person economy, which of the following statements will be true?

Identify some of the possible transactions costs involved in an exchange of a used car between two individuals.

Brandon finds that Max Solutions can supply computers with the specific configuration he needs.His company enters into a contract with Max Solutions to provide 60 custom-built desktops at an agreed price.The contract between them will ensure each of the following, EXCEPT:

Fiona can iron 5 shirts or cook 2 meals in an hour.Alicia can iron 6 shirts or cook 1 meal in an hour.Which of the following statements is true?

Mention the factors which have helped South Africa's electricity supplier, Eskom, to reduce transaction costs and distribute electricity cheaply?

Jake can wash 6 cars or mow 3 lawns during the same time.His marginal cost of washing a car is:

Price tags reduce transaction costs in countries where people's time is more valuable.

Explain how the development of telecommunications has made cities like Bangalore and Omaha important locations for the development of service trade?

Which of the following statements is true regarding the opportunity cost of time?

Prices play a smaller role in ___, in contrast to other modes of governance like _ and ___.

If you have a comparative advantage in producing a good, it implies:

What is the marginal cost rule of specialization?

When the slope of a country's production set declines, it implies:

Which of the following statements is true of contracts?

Why should an economy specialize and trade according to its marginal cost advantage or comparative advantage?

The closer the exchange price is to the valuation of the buyer, the greater the buyer's share of the economic value created by the exchange.

If the transaction between you and the seller takes place at a price that equals your valuation of the product, then:

Reasoning With Economics: Models and Information

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters

Exam 2: Transactions and Institutions: the Building Blocks

What is economic value of an exchange?

Which of the following statements is true regarding protocols in various types of auctions?

Suppose a seller's opportunity cost matches a buyer's valuation of the product.Assuming a two-person economy, which of the following statements will be true?

Identify some of the possible transactions costs involved in an exchange of a used car between two individuals.

Brandon finds that Max Solutions can supply computers with the specific configuration he needs.His company enters into a contract with Max Solutions to provide 60 custom-built desktops at an agreed price.The contract between them will ensure each of the following, EXCEPT:

Fiona can iron 5 shirts or cook 2 meals in an hour.Alicia can iron 6 shirts or cook 1 meal in an hour.Which of the following statements is true?

Mention the factors which have helped South Africa's electricity supplier, Eskom, to reduce transaction costs and distribute electricity cheaply?

Jake can wash 6 cars or mow 3 lawns during the same time.His marginal cost of washing a car is:

Price tags reduce transaction costs in countries where people's time is more valuable.

Explain how the development of telecommunications has made cities like Bangalore and Omaha important locations for the development of service trade?

Which of the following statements is true regarding the opportunity cost of time?

Prices play a smaller role in _____, in contrast to other modes of governance like _____ and _____.

If you have a comparative advantage in producing a good, it implies:

What is the marginal cost rule of specialization?

When the slope of a country's production set declines, it implies:

Which of the following statements is true of contracts?

Why should an economy specialize and trade according to its marginal cost advantage or comparative advantage?

The closer the exchange price is to the valuation of the buyer, the greater the buyer's share of the economic value created by the exchange.

If the transaction between you and the seller takes place at a price that equals your valuation of the product, then:

Reasoning With Economics: Models and Information

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters

Prices play a smaller role in ___, in contrast to other modes of governance like _ and ___.