Price controls: (Multiple Choice)

Price controls:
 a. are always popular with consumers because they lower prices.
  b. create shortages.
  c. increase producer surplus because firms can now sell a greater quantity of a good at a lower price.
  d. are necessary to preserve equity.

QUESTION 2

Appendix: An optimal incentives contract can induce the revelation of true costs in a partnership by
 a. imposing penalties when costs are overstated
  b. offering bonus payments when costs are verified
  c. renewing the reliance relationship
  d. linking revealed cost to the partner's foregone expected profits
  e. enlisting third-party enforcement

QUESTION 3

The optimal bidding strategy for an oral auction is
 a. To shade your bid below your true value and drop out well before it is reached
  b. To shade your bid below your true value and drop out just when the shaded amount is reached
  c. To bid drop out when the bidding exceeds your true value
  d. To size up your competition to determine how much to shade your bid

QUESTION 4

One example of Ricardian rent is:
 a. rent paid to landlords under price controls.
  b. the difference between the price of a highly demanded unique piece of artwork and the opportunity cost of maintaining it.
  c. the amount paid to a seller above the equilibrium price of tourist class tickets in order to receive higher quality seats in first class.
  d. the price rise of wool from a disease among sheep.

QUESTION 5

Appendix: Each partner in a simple profit-sharing contract that splits the independently verifiable sales revenue minus unobservable cost has an incentive
 a. to reject an automatic renewal of the contract
  b. to understate fixed cost
  c. to overstate avoidable cost
  d. to understate customer loyalty for repeat purchases
  e. to renew the partnership contract