Screening is
a. actions by the informed party to reveal her true risks
b. actions by the informed party to conceal her true risks
c. actions by the uninformed party to uncover the true risks
d. actions by the uninformed party to conceal the true risks
QUESTION 2If a firm is a price taker in both the input and output markets, its marginal revenue product of labor is given by:
a. the price of its output times the labor's marginal physical productivity.
b. the marginal value product of labor.
c. the marginal revenue product of capital times the ratio of the wage rate to the rental rate on capital.
d. all of the above.
QUESTION 3Firms must prevent resale between segments using a variety of:
a. fences
b. bridges
c. tunnels
d. none of the above
QUESTION 4The following is an example of risk aversion
a. those applying for a well-paid job tend to be the most qualified
b. more reckless drivers opt for cars with fewer safety devices
c. the contractor with the lowest bid for a is the most qualified
d. Initial Public Offerings (IPOs) seek investors when prospects look poor
QUESTION 5An input's marginal revenue product is given by:
a. the input's marginal expense times marginal revenue.
b. the input's marginal expense times the input's marginal physical productivity.
c. marginal revenue times the number of units employed.
d. the input's marginal physical productivity times marginal revenue of the firm's output.
QUESTION 6Firms should begin their pricing decisions by:
a. assessing total marginal cost of the product
b. identifying the value drivers in each customer segment
c. researching the market price of competitors
d. none of the above
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