Suppose there are 11 buyers and 11 sellers, each willing to buy or sell one unit of a good, with values 14, 13, 12, 11, 10, 9, 8, 7, 6, 5, 4,. Assume no transaction costs and a competitive market. At the optimal bid, ask spread, what is the total profit that the market maker makes?
a. 8
b. 12
c. 18
d. 20
QUESTION 2A movie producer has to decide to fund a new movie project. For this project, a success would earn 20 million and a failure would cost 60 million in lost profits. At what probability of expected success should he fund the movie?
a. 0.20
b. 0.25
c. 0.50
d. 0.75
QUESTION 3Suppose there are 11 buyers and 11 sellers, each willing to buy or sell one unit of a good, with values 14, 13, 12, 11, 10, 9, 8, 7, 6, 5, 4,. Assume no transaction costs and a competitive market. At the optimal bid-ask spread, how many transactions would the market maker undertake in this market
a. two transacttions
b. three transactions
c. four transactions
d. five transactions
QUESTION 4You decrease your product price by 10 in market A but leave it unchanged in market B. Sales in A rise from 840 units per week to 940 while sales in B also rise from 770 to 790 . The difference-in-difference estimate of the effect of the price change is:
a. 80 units
b. 100 units
c. 120 units
d. 140 units
QUESTION 5Suppose there are 11 buyers and 11 sellers, each willing to buy or sell one unit of a good, with values 14, 13, 12, 11, 10, 9, 8, 7, 6, 5, 4,. Assume no transaction costs and a competitive market. If there is a market maker in this market. What is the profit maximizing bid-ask spread per unit for a market maker?
a. 6 bid; 12 ask
b. 7 bid; 11 ask
c. 8 bid; 10 ask
d. 9 bid; 9 ask
QUESTION 6Two important considerations during the difference-in-difference approach are
a. Representativeness, Reflectiveness
b. Injections, Leakages
c. Representativeness, Leakages
d. Reflectiveness, Injections
QUESTION 7If a firm can create important complements to its original product, it has
a. Created an uncontrollable factor that can change the demand for its product
b. Created an uncontrollable factor that cannot change the demand for its product
c. Created a controllable factor that can change the demand for its product
d. Created a controllable factor that cannot change the demand for its product
QUESTION 8The manager of an ice-cream parlor decides to introduce a new ice-cream flavor in his Dallas, TX based restaurants to compare the sales of these restaurants to the ones with no new flavors. She decides to run a difference in difference approach. Which of the following is true?
a. The first difference would be the difference in the sales of the Dallas stores before and after the introduction
b. The second difference would be the difference in the sales in other stores before and after the Dallas stores introduced the new flavor
c. The second difference would be the difference between the post introduction sales in the Dallas stores and the control group
d. Only A&B
QUESTION 9Which of these is an example of a controllable factor for a firm that sells pizzas
a. The price of the pizza
b. The delivery rates of the pizza
c. The quality of the wings sold by the street vendor across the street
d. Both A & B
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