Contracts are distinguished from tactical alliances by which of the following characteristics:
a. involve sequential responses
b. require third-party enforcement
c. raise shareholder value
d. elicit diminished reactions from competitors
QUESTION 2An indication that Insurance companies anticipate adverse selection is
a. they require a deductible
b. they do not classify clients into different risk types according to their claim history
c. they do not classify clients into different risk types according to pre-existing conditions
d. they do not require a co-payment
QUESTION 3The substitution effect of a change in wage rate on a firm's demand for labor input will be more significant:
a. the greater the change in output.
b. the more sharply curved are the firm's isoquants.
c. the flatter are the firm's isoquants.
d. the larger the quantity of labor employed.
QUESTION 4Vertical integration may be motivated by all of the following except:
a. Upstream market power
b. Economies of ever wider spans of managerial control
c. Technological interdependencies
d. Reduced search and bargaining cost
e. The hold-up problem.
QUESTION 5Signaling 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 6A profit-maximizing firm will never hire that quantity of a factor of production for which that factor has an increasing marginal productivity because:
a. it would not be maximizing output.
b. it would not be maximizing the productivity of labor.
c. it would not be minimizing costs.
d. it would not be maximizing profits.
QUESTION 7Non-redeployable durable assets that are dependent upon unique complementary and perfectly redeployable assets to achieve substantial value-added will typically be organized as
a. an export trading company
b. a spot market contract
c. a vertically integrated firm
d. an on-going relational contract
e. a joint stock company.
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