A firm in a ______________ faces a __________ demand curve.
a. perfectly competitive market; perfectly inelastic
b. perfectly competitive market; perfectly elastic
c. monopoly market; perfectly elastic
d. monopoly market; horizontal
QUESTION 2The more bidders there are at an oral auction,
a. the higher the expected selling price
b. the higher each bidder bids
c. the longer that each bidder will continue to bid
d. the less each bidder will shade his bid
QUESTION 3Which of the following markets are closest to perfectly competitive
a. The market for smart phones
b. The market for generic pharmaceuticals
c. The market for sport shoes
d. The market for fast food
QUESTION 4If the bidders at an oral auction have true values of 78, 72, 66, and 65, the item will sell for
a. 78
b. just under 78
c. 72
d. just over 72
QUESTION 5All of these are characteristics of a competitive industry, except:
a. Many substitutes
b. No barriers to entry
c. Homogenous product
d. Little or no information on rivals' products
QUESTION 6If the bidders at an oral auction have true values of 8, 7, 6, and 5, the item will sell for
a. 8
b. 7
c. just over 7
d. just under 7
QUESTION 7Financial Innovation More and more of the back office tasks for commodity traders and market makers can be easily automated which lowers the costs of making transactions. What is the effect of these technical changes on the bid-ask spreads between commodity buyers and sellers at commodity exchanges?
QUESTION 8The 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 drop out when the bidding exceeds your true value
d. To size up your competition to determine how much to shade your bid
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