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| 1 | |
Using the information above, Jalal will benefit more if he: |
| | A) | Sells the coin at the local collector's shop |
| | B) | Sells the coin on ebay.com |
| | C) | Sells the coin in another town |
| | D) | Does not sell the coin at all |
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| 2 | |
If Jalal sells the coin at the local collector's shop, his surplus is: |
| | A) | $0 |
| | B) | $80 |
| | C) | $100 |
| | D) | $1,100 |
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| 3 | |
If Jalal sells the coin on ebay.com, his surplus is: |
| | A) | $0 |
| | B) | $80 |
| | C) | $395 |
| | D) | $550 |
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| 4 | |
If Jalal sells the coin at the local collector's shop, the shop owner's surplus is: |
| | A) | $0 |
| | B) | $10 |
| | C) | $90 |
| | D) | $100 |
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| 5 | |
If Jalal sells the coin on ebay.com, the buyer's surplus is: |
| | A) | $-5 |
| | B) | $0 |
| | C) | $150 |
| | D) | $700 |
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| 6 | |
The difference between the total surplus when Jalal sells the coin on ebay.com versus selling it to the local collector's shop is: |
| | A) | $0 |
| | B) | $80 |
| | C) | $465 |
| | D) | $545 |
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| 7 | |
The curve defining the relationship between the marginal cost and the number of units of information is most likely: |
| | A) | Horizontal |
| | B) | Vertical |
| | C) | Downward sloping |
| | D) | Upward sloping |
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| 8 | |
A fair gamble has: |
| | A) | A positive expected return |
| | B) | An expected return of zero |
| | C) | A negative expected return |
| | D) | None of the above |
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| 9 | |
Economic incentives suggest that insurance premiums are: |
| | A) | Higher because they include mostly high risk insurers |
| | B) | Accurately reflect both low risk and high risk insurers |
| | C) | Lower because they include mostly low risk insurers |
| | D) | None of the above |
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| 10 | |
The driver of a car that is fully insured will most likely drive less carefully. This is due to: |
| | A) | Adverse selection |
| | B) | Statistical discrimination |
| | C) | Costly-to-fake principle |
| | D) | Moral hazard |
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| 11 | |
Your father wants to buy a used car. You, having studied economics, know that he will most likely buy a car that conforms to the: |
| | A) | Moral hazard problem |
| | B) | Costly-to-fake principle |
| | C) | Lemons model |
| | D) | Statistical discrimination inference |
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| 12 | |
Following question 11, the seller of the used car gives your father a two year warranty. Since this is the only seller that has offered your father the warranty, your father decides to buy his car, as he believes that the seller wouldn't offer him this long warranty had he not been sure of the above average quality of the car. This is an example of: |
| | A) | Moral hazard problem |
| | B) | Costly-to-fake principle |
| | C) | Lemons model |
| | D) | Statistical discrimination inference |
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| 13 | |
You decide to buy a new mobile phone. You go to Axiom and ask the salesperson to fill you in on the latest phones and the differences in their features. You then tell the salesperson that you need some time to make up your mind and that you will come back later this week. When you arrive home, you decide to buy I- phone 4S online. This is an example of: |
| | A) | Adverse selection |
| | B) | Moral hazard |
| | C) | Costly-to-fake principle |
| | D) | Free rider problem |
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| 14 | |
Ahmad and Amr are two businessmen attempting to close a business deal. On their first meeting, Amr, who owns a Mitsubishi Pajero and a Porsche, decides to drive the Porsche to the meeting. Amr believes that driving the Porsche will give a signal to Ahmad that he is wealthy and will not renege on the deal terms. This is an example of: |
| | A) | Conspicuous consumption |
| | B) | Statistical discrimination |
| | C) | Adverse selection |
| | D) | Moral hazard |
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| 15 | |
A risk neutral person will accept: |
| | A) | Only a fair gamble |
| | B) | Only a better than fair gamble |
| | C) | Both a fair and better than fair gamble |
| | D) | No gamble at all |
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