The expected value is: The product of the sums of the probabilties and the value

Question

The expected value is:

The product of the sums of the probabilties and the values in different states

The difference between the products of the probabilities and the values in different states

The sum of the products of the probabilities and the values in different states

The difference between the sums of the probabilities and the values in different states

QUESTION 2

You can invest in either project A or B. Project A has value $150 with probability 0.1 and value $75 with probability 0.9. Project B has value $120 with probability 0.2 and value $75 with probability 0.8.

You should not invest in either

You cannot tell from the info presented

You should invest in project A

You should invest in project B

QUESTION 3

Half of all potential customers would pay $10 for your product but half would only pay $8 but you cannot tell them apart. Your marginal costs are $4. If you set the price at $10, the expected profit is:

$5

$3

$6

$4

QUESTION 4

An oral auction:

Is also called an English auction

Is where bidders submit increasing bids until all but one remains

Is strategically equivalent to a Vickrey auction

All of the above

QUESTION 5

First-price acutions have all of the following properties EXCEPT:

Highest bid wins

The price is set to the highest bid

The good is assigned to the highest bidder

Highest bidder pays the second highest bid

QUESTION 6

In common-value auctions:

The true value of the item differes accross bidders

Every bidder knows the value of the object being sold

All bidders know the estimates of the others

Each bidder makes their own estimate of the value of the good

QUESTION 7

An example of Moral Hazard is:

An hourly salesman working less hard than a commission salesman

A taxi driver paid per mile taking the shortest route

A piece-rate garment worker shirking more than a per-jour worker

An author on contract going to as many book signings as one with a percentage royalty rate

QUESTION 8

The types of problems in principal-agent relationships typically include:

Adverse selection - whom to hire

Moral hazard - how to motivate workers

Uncertainty - how many workers will be needed

A and B

A, B and C

QUESTION 9

An example of organizational architecture based on the different functions of a firm is when divisions are defined as

Component 1 Plant, Component 2 Plant, Component 3 Plant, Final Assembly

R&D, Engineering, Production, Marketing, Sales

Store 1, Store 2, Store 3, Region A, Region B, Sales Division

Business Customers, Educational Customers, Household Customers

QUESTION 10

Conflicts can arise between divisions because:

Some activities across divisions benefit from coordination

Managers of profit centers care too little about the effects of their decisions on other divisions

Managers are rewarded only for how well their own division is run

All of the above

The product of the sums of the probabilties and the values in different states

The difference between the products of the probabilities and the values in different states

The sum of the products of the probabilities and the values in different states

The difference between the sums of the probabilities and the values in different states

Explanation / Answer

Answer 1

Expected Value is "The sum of the products of the probabilities and the values in different states" thus correct answer in (C)

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