True-False Questions 1. Firms in all types of market structures pay attention to current rival firms' behavior. 2. The Cournot model assumes that firm A maximizes its profit, holding firm B's output constant. 3. The three models of oligopolies, Cournot, Stackelberg and Bertrand, all assume firms independently choose the quantity of output to produce. 4. If there are 2 identical firms in a market that choose the quantity they produce, total welfare is the highest when there is a cartel. 5. Expected value represents the average of all outcomes if one were to undertake the risky event many times over and over again. 6. If a person is risk averse, then she has negative marginal utility of wealth. 7. Changing the price of a good will usually result in a negative externality. 8. The efficient quantity of a public good occurs when the marginal cost of providing that good equals the sum of the marginal benefits to all individuals. 9. If sellers of good cars and sellers of lemons both offer a warranty on their cars, consumers will then be able to tell which cars are the lemons. 10. Signals can help prevent adverse selection as long as a false signal is costly to the person sending it. 11. When the production of a worker is relatively easily observable, the firm can pay a piece-rate.
True-False Questions 1. Firms in all types of market structures pay attention to current rival firms' behavior. 2. The Cournot model assumes that firm A maximizes its profit, holding firm B's output constant. 3. The three models of oligopolies, Cournot, Stackelberg and Bertrand, all assume firms independently choose the quantity of output to produce. 4. If there are 2 identical firms in a market that choose the quantity they produce, total welfare is the highest when there is a cartel. 5. Expected value represents the average of all outcomes if one were to undertake the risky event many times over and over again. 6. If a person is risk averse, then she has negative marginal utility of wealth. 7. Changing the price of a good will usually result in a negative externality. 8. The efficient quantity of a public good occurs when the marginal cost of providing that good equals the sum of the marginal benefits to all individuals. 9. If sellers of good cars and sellers of lemons both offer a warranty on their cars, consumers will then be able to tell which cars are the lemons. 10. Signals can help prevent adverse selection as long as a false signal is costly to the person sending it. 11. When the production of a worker is relatively easily observable, the firm can pay a piece-rate.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:True-False Questions
1. Firms in all types of market structures pay attention to current rival firms' behavior.
2. The Cournot model assumes that firm A maximizes its profit, holding firm B's output
constant.
3. The three models of oligopolies, Cournot, Stackelberg and Bertrand, all assume firms
independently choose the quantity of output to produce.
4. If there are 2 identical firms in a market that choose the quantity they produce, total
welfare is the highest when there is a cartel.
5. Expected value represents the average of all outcomes if one were to undertake the
risky event many times over and over again.
6. If a person is risk averse, then she has negative marginal utility of wealth.
7. Changing the price of a good will usually result in a negative externality.
8. The efficient quantity of a public good occurs when the marginal cost of providing
that good equals the sum of the marginal benefits to all individuals.
9. If sellers of good cars and sellers of lemons both offer a warranty on their cars,
consumers will then be able to tell which cars are the lemons.
10. Signals can help prevent adverse selection as long as a false signal is costly to the
person sending it.
11. When the production of a worker is relatively easily observable, the firm can pay a
piece-rate.
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