Suppose Bella had entered into a contract to rent Michelle's apartment for one year. The contract mentioned that if either of the two parties breached it, the other was to recover her loss. If Michelle breaches the contract, a payment which leaves Bella no worse off than if the contract was honored, is called opportunistic damage.
Indicate whether the statement is true or false
QUESTION 2Net social benefits are maximized when:
A) marginal benefits equal marginal costs.
B) marginal benefits are greater than marginal costs.
C) marginal benefits are less than marginal costs.
D) total benefits are equal to total costs.
E) average benefits are marginal benefits are equal.
QUESTION 3The Prisoners' Dilemma is an example of a cooperative game.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4If each of the parties to a contract controls a resource essential for the other's survival, opportunistic behavior by any of them will increase the value of the transaction.
Indicate whether the statement is true or false
QUESTION 5Generally, marginal costs ____ as quantity increases?
A) rise.
B) fall.
C) remain constant.
D) equal marginal benefits.
E) equal total costs.
QUESTION 6An industry with only three large equally-sized firms would have the same four firm concentration ratio but a higher Herfindahl-Hirshman Index compared to an industry with only four equally sized firms.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7Economic value of a transaction where the buyer is allowed to deal with several sellers at the same time will always be higher than a transaction which ties the buyer to a particular seller by contract.
Indicate whether the statement is true or false
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