Exam 3: Exchange and Markets

A business manager has to decide whether to buy supplies from the marketplace or whether to build them inside the company.What do "information" and "contracting" have to do with this decision?

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Question 1

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Contracting costs and the costs of acquiring specific knowledge or specific information play a large role in the decision of whether transactions occur in the marketplace or within the boundaries of the firm.Firms are more efficient than markets at organizing some transactions when the costs of information gathering and contracting in markets are high.However,when information is available at a lower cost and contracting or transactional costs are low in the marketplace,it is more efficient for transactions to occur in the marketplace.Individuals have a strong incentive to organize transactions efficiently to maximize gains from trade.

There is an increase in availability of alternative fuels through research and development.Which of the following correctly captures the effect of this change on the market for gasoline?

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Question 2

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Many products come with a warning about how to use the product without harming other people.Why?

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Question 3

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The information about how to use a particular product without harming other people is a specific knowledge.The warning is a low-cost method of transferring this information from the producer of the product to the user of the product.

Markets can give a buyer everything a buyer needs to know about a product even though the buyer does not have the training to understand the specific knowledge needed to build or distribute the product.Explain.

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Question 4

Assume the demand function for basketballs is given by Q_D = 150 −3P + 0.1I,where P = price of a basketball,and I = average income of consumers.Also,assume the supply of basketballs is given by Q_S = 2P.If the market for basketballs is perfectly competitive,and the average income is equal to $1,500,what is the equilibrium price and quantity? What if a 20 percent income tax is introduced?

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Question 5

There is an increase in incomes due to a tech boom.Which of the following correctly captures the effect of this change on the market for gasoline?

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Question 6

Let Q_d = 10 - 2P and Q_s = 3P be the demand and supply curves for Beer.The equilibrium combination (P* and Q*)in the market is ______.

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Question 7

A price ceiling on a good will usually

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Question 8

Tom and Jerry have been roommates for the past two years.During this period,they bought 11 CDs together.Now that each is taking his own apartment,they are deciding how to split their possessions.Tom suggests they take five CDs each and give the extra one to Arnold,their neighbor.Jerry,on the other hand,suggests they flip a coin to decide who gets the 11th CD.Assuming they neither like nor dislike being altruistic,which of the two suggestions is Pareto efficient?

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Question 9

The following diagram shows a market in equilibrium.If there was a $3.50 price floor,

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Question 10

A working knowledge of both markets and firms is important for managers to be effective because it

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Question 11

The war in Iraq comes to an end.Iran and Afghanistan lay pipes to generate more oil.The United States and Venezuela enter into an era of friendship.Which of the following correctly captures the effect of this change on the market for gasoline?

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Question 12

The demand and supply curves in the market for gasoline are illustrated in the graph below. Starting at the equilibrium point,if the government imposes a price ceiling of $10,producer surplus will fall by an amount given by the area ????_____ <>

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Question 13

There is an OPEC cartel that reduces the production of world oil by several million barrels a day.Which of the following correctly captures the effect of this change on the market for gasoline?

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Question 14

Draw supply and demand curves.Show the impact of an increase in demand on the price and quantity exchanged in the market.Show the impact of a decrease in demand on the price and quantity exchanged in the market.

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Question 15

Assume the market for pencils is competitive and originally in equilibrium.As a result of an increase in the price of graphite,the supply of pencils decreases.What is true of the new equilibrium?

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Question 16

Externalities exist when the actions of one agent

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Question 17

Assume the market for ceiling fans is perfectly competitive and is currently in equilibrium.If the demand increases while the supply decreases,then we can be certain that

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Question 18

The demand and supply curves in the market for gasoline are illustrated in the graph below. Starting at the equilibrium point,if the government imposes a price ceiling of $10,the deadweight loss will be the area ______.

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Question 19

If the price of movie tickets doubles,then

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Question 20

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Exam 3: Exchange and Markets

A business manager has to decide whether to buy supplies from the marketplace or whether to build them inside the company.What do "information" and "contracting" have to do with this decision?

There is an increase in availability of alternative fuels through research and development.Which of the following correctly captures the effect of this change on the market for gasoline?

Many products come with a warning about how to use the product without harming other people.Why?

Markets can give a buyer everything a buyer needs to know about a product even though the buyer does not have the training to understand the specific knowledge needed to build or distribute the product.Explain.

There is an increase in incomes due to a tech boom.Which of the following correctly captures the effect of this change on the market for gasoline?

Let Qd = 10 - 2P and Qs = 3P be the demand and supply curves for Beer.The equilibrium combination (P* and Q*)in the market is ______.

A price ceiling on a good will usually

The following diagram shows a market in equilibrium.If there was a $3.50 price floor,

A working knowledge of both markets and firms is important for managers to be effective because it

The war in Iraq comes to an end.Iran and Afghanistan lay pipes to generate more oil.The United States and Venezuela enter into an era of friendship.Which of the following correctly captures the effect of this change on the market for gasoline?

The demand and supply curves in the market for gasoline are illustrated in the graph below. Starting at the equilibrium point,if the government imposes a price ceiling of $10,producer surplus will fall by an amount given by the area ????_____ <>

There is an OPEC cartel that reduces the production of world oil by several million barrels a day.Which of the following correctly captures the effect of this change on the market for gasoline?

Draw supply and demand curves.Show the impact of an increase in demand on the price and quantity exchanged in the market.Show the impact of a decrease in demand on the price and quantity exchanged in the market.

Assume the market for pencils is competitive and originally in equilibrium.As a result of an increase in the price of graphite,the supply of pencils decreases.What is true of the new equilibrium?

Externalities exist when the actions of one agent

Assume the market for ceiling fans is perfectly competitive and is currently in equilibrium.If the demand increases while the supply decreases,then we can be certain that

The demand and supply curves in the market for gasoline are illustrated in the graph below. Starting at the equilibrium point,if the government imposes a price ceiling of $10,the deadweight loss will be the area ______.

If the price of movie tickets doubles,then

Introduction

Economists View of Behavior

Demand

Production and Cost

Market Structure

Pricing With Market Power

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: the Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: the Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

Filters

Let Q_d = 10 - 2P and Q_s = 3P be the demand and supply curves for Beer.The equilibrium combination (P* and Q*)in the market is ______.