1 .		A cartel [Hint]   is characterized by intense rivalry.   requires government approval to be chartered in the United States.   generally requires a formal agreement among the members.   generally leads to more efficient resource allocation.
2 .		Officers or employees of any / all of the following firms have been found guilty or have pled guilty to collusive activities except [Hint]   Westinghouse.   General Electric.   Acher-Daniels-Midland.   None of the above.
3 .		Cartels may thrive under all of the following conditions except [Hint]   significant product differentiation.   substantial barriers to entering the industry.   relatively similar cost and production structure.   relatively close geographic proximity of the firms.
4 .		Which of the following organizations or types of organizations is most likely to have a legal, formal cartel agreement? [Hint]   The American Medical Association (AMA).   The United Auto Workers (UAW).   The American Association of Residential Roofers (AARR).   None of the above are likely to have legal, formal cartel agreements.
5 .		Price leadership [Hint]   is not a cartel process to signal members to change prices.   is likely when collusive arrangements are not easily struck.   is found in many industries.   All of the above statements are true.
6 .		Barometric price leadership [Hint]   is often characterized by several iterations of price changes to arrive at a new, agreeable price.   illustrates how the largest single firm acts as a barometer for firms to change prices in the industry.   often results in the smallest firms being run out of business by the largest, most cost-efficient firm.   None of the above statements regarding barometric price leadership are true.
7 .		Under dominant price leadership [Hint]   the largest firm determines industry price.   the largest firm may set its price as a monopoly would.   the largest firm has an incentive not to run the smaller firms out of business.   All of the above are true in regard to dominant price leadership.
8 .		Under the Baumol model [Hint]   the goal of the firm is revenue maximization subject to achieving an acceptable level of profit.   the firms possess significant price setting power.   executive remuneration may be a function of revenue rather than profits.   All of the above statements regarding the Baumol model are accurate.
9 .		Price discrimination [Hint]   regards normative assessment of the pricing practice.   means the price to marginal cost ratio differs between or among similar products.   is primarily concerned with ascertaining the social welfare effects of charging different prices to different customers.   None of the above are true in regard to price discrimination.
10 .		Which of the following is / are examples of first-degree price discrimination? [Hint]   America Online (AOL) charging a base monthly fee and an additional hourly charge for usage over 20 hours per month.   McDonalds offering a 15% discount to senior citizens.   A salesperson negotiating the price of a new Ferrari F-50.   None of the above are examples of first-degree price discrimination.
11 .		Which of the following is / are examples of second-degree price discrimination? [Hint]   America Online (AOL) charging a base monthly fee and an additional hourly charge for usage over 20 hours per month.   McDonalds offering a 15% discount to senior citizens.   A salesperson negotiating the price of a new Ferrari F-50.   None of the above are examples of second-degree price discrimination.
12 .		Which of the following is / are examples of third-degree price discrimination? [Hint]   America Online (AOL) charging a base monthly fee and an additional hourly charge for usage over 20 hours per month.   McDonalds offering a 15% discount to senior citizens.   A salesperson negotiating the price of a new Ferrari F-50.   None of the above are examples of third-degree price discrimination.
13 .		Use the following information to answer questions 13 through 15. Refer to the "Definitions and mathematical expressions" section for general descriptions of the variables used below. Cutting-Edge Computer Peripherals, a small firm designing, manufacturing, and marketing gaming peripherals such as joysticks, steering wheels, and hand controllers has estimated the following demand curves for its two retail outlets: QSR = 1200 - 5 PSR QW =   800 - 4 PW The firm's MC for their "Go Speedy Racer" steering wheel is constant at $50 over the relevant range of output. The subscript SW refers to the firm's Steer Ring location, while the subscript W refers to the firm's Wheeltown location. The Steer Ring location's [Hint]   estimated marginal revenue function takes the form: MR = 1200 - 0.4QSR.   estimated marginal revenue function takes the form: MR = 240 - 0.4QSR.   estimated marginal revenue function takes the form: MR = 200 - 0.4QSR.   estimated total revenue function takes the form: TR = 1200 - 0.2QSR2.
14 .		The Wheeltown location's [Hint]   estimated marginal revenue function takes the form: MR = 800 - 0.5QW.   estimated total revenue function takes the form: TR = 200Q - 0.5QW2.   estimated marginal revenue function takes the form: MR = 200 - 0.5QW.   None of the above are true.
15 .		Cutting-Edge Peripherals [Hint]   is expected to sell 300 units at a price of $95 at the Wheeltown location.   is expected to sell 475 units at a price of $125 at the Wheeltown location.   is expected to earn an economic profit if TFC are less than $43,875.   All of the above are true.
16 .		Which of the following has not been proposed as an explanation for the existence of tying arrangements? [Hint]   Quality control.   Economies of scale or scope in distribution.   Social welfare maximization.   Evasion of price controls.
17 .		When a firm engages in cost-plus pricing [Hint]   it is ignoring basic microeconomic principles of profit maximization as fixed cost is included in the determination of the selling price.   the resulting level of output the firm produces may be consistent with a marginal pricing approach if the long-run average cost curve exhibits constant returns to scale over the relevant range of output.   the firm may appear to be engaging in a marginal pricing practice even if the markup is not a reflection of a normal profit.   The first two options above are correct.
18 .		When a firm produces a number of different products [Hint]   it may not be acting rationally if the products in question are complements and it fails to account for the effect of changes in demand of one by the introduction or retirement of the complement it produces.   and the goods in question are substitutes, the firm must consider the impact of introduction or retirement of the substitute on both the demand for and cost structure associated with the original product.   and production of the products takes place in fixed proportions, the firm equates the marginal revenue curve of each product to the marginal cost curve to determine the quantities and prices of each to produce.   The first two options above are correct.
19 .		When a firm engages in transfer pricing [Hint]   and there is a perfectly competitive external market for the firm's division that supplies an input to the firm's final product division, the supplying division will act as a perfect competitor and the final product division will act in accord with the market structure in which it is operating.   and there is no external market for the firm's division that supplies an input to the firm's final product division, the supply division will produce exactly the number of units of the input required by the final product division.   Both of the above are accurate.   None of the above are accurate.
20 .		Which of the following statements is / are not true? [Hint]   The price charged by Sony when it introduced the DiscMan is an example of price skimming.   The price charged by Dell Computer when it entered the PC market is an example of penetration pricing.   The price charged by Neiman Marcus for the clothes it carries is an example of psychological pricing.   Only the first two options above are accurate.