QUESTION 1 A company that rewards its salespeople based on the number of sales m

ID: 1219220 • Letter: Q

Question

QUESTION 1

A company that rewards its salespeople based on the number of sales made can expect

Higher sales prices

Lower sales prices

No sales

All of the above

2.5 points

QUESTION 2

By threatening to lockout the workers, the firm has

Eliminated half of the strategies

All of the above

Made it in the union’s best interest to not strike

Forced the union to choose the best response in the firm’s best interest

2.5 points

QUESTION 3

For the following questions 8-16 use this setup.

Consider a simultaneous move game between a union and a company. If both the parties bargain hard, each would gain nothing. If only one party bargains hard the accommodating party gets a profit of $1 million while the bargaining party gets a $5 million, while if they both accommodate, they each get $3 million.

What would be the Nash equilibrium of this game?

Bargain hard, bargain hard

Firm bargains hard, union accommodates

Union bargains hard, firm accommodates

Both B&C

2.5 points

QUESTION 4

For the following questions 8-16 use this setup.

Is this Nash equilibrium efficient?

Yes, because the sum of payoffs is highest

No, because both the parties can do better

No, because both the parties are maximizing their profits

All of the above

2.5 points

QUESTION 5

For the following questions 8-16 use this setup.

Could either party do better?

Yes, one party can do better, but only at the expense of the other

No, neither party can do better

Yes, both parties can do better without hurting each other if they cooperated

No, each party has its best possible outcome

2.5 points

QUESTION 6

For the following questions 8-16 use this setup.

If the Union threatens a strike, what is the firm’s best response?

Bargain hard

Hide

Run

Accommodate

2.5 points

QUESTION 7

For the following questions 8-16 use this setup.

If the union leader has already sent strikers to the picket line before entering negotiations, the union has

Eliminated half of the strategies of the game

Forced the firm to choose the best response in the union’s best interest

Made it in the firm’s best interest to accommodate their requests

All of the above

2.5 points

QUESTION 8

For the following questions 8-16 use this setup.

If the firm hires security guards to enforce a lockout, what are they implying?

They would always accommodate

They would always bargain hard

They would not accommodate

Both B&C

2.5 points

QUESTION 9

If, during the negotiations between the union and the management a strike occurs, it would be because

The union is trying to convince the management that it will stick to its strategy

The management doesn’t believe the union’s threat

All of the above

None of the above

2.5 points

QUESTION 10

If, during the negotiations between the union and the management, a lockout occurs, it would be because

The management is trying to convince the union that it would stick to its strategy

The union believes the management’s threat

All of the above

None of the above

2.5 points

QUESTION 11

If the firm threatens a lockout (and the threat is credible), what is the union’s best response?

Run

Accommodate

Hide

Bargain hard

2.5 points

QUESTION 12

In the strategic sequential labor negotiation game:

The first mover has an advantage

The second mover has an advantage

There is no advantage to either mover

None of the above

2.5 points

QUESTION 13

Jim is haggling with a car dealer, along with another customer, over the sale price of a used car. When he entered the store, the storekeeper was already haggling with the other customer. As Jim makes an offer on the car, the other customer leaves the store, and the storekeeper accepts Jim’s offer. This is because

The storekeeper’s disagreement value decreased

The storekeeper's disagreement value increased

The storekeeper’s disagreement value did not change

None of the above

2.5 points

QUESTION 14

Jim is haggling with a car dealer over the sale price of a used car. When he entered the store, the storekeeper was already haggling with the other customer. His bargaining position could get worse if

The customer leaves

Another customer enters the store, interested in the car

He gets an offer from another seller

All of the above

2.5 points

QUESTION 15

Jim is haggling with a car dealer over the sale price of a used car. When he entered the store he was the only customer. During the negotiations, a second customer walks in and is interested in that particular car. At this point

Jim has a better chance of having his offer accepted, since the seller does not have any outside offers

Jim has lower chances of having his offer accepted, since the seller has more outside offers

The disagreement value for the seller has increased

This should not impact Jim’s chances of having his offer accepted

2.5 points

QUESTION 16

Jim is haggling with a car dealer over the sale price of a used car. When he entered the store he was the only customer. This means that

Jim has a better chance of having his offer accepted, since the seller does not have any outside offers

Jim has lower chances of having his offer accepted, since the seller has more outside offers

The disagreement value for the seller has increased

Only A&C

2.5 points

QUESTION 17

Jim is haggling with a car dealer over the sale price of a used car. When he entered the store, it was empty. During the negotiations, a second customers walks in, interested in that particular car, and the storekeeper rejects Jim’s offer. This is because

The car dealer’s disagreement value decreased

The car dealer’s disagreement value increased

The car dealer’s disagreement value did not change

None of the above

2.5 points

QUESTION 18

Jim is haggling with a car dealer over the sale price of a used car. Which of the following would determine the amount of surplus Jim extracts from the purchase?

Total difference between the buyer’s and seller’s valuations of the car

The number of customers trying to buy that particular car

The number of sellers trying to make Jim a sale

All of the above

2.5 points

QUESTION 19

Jim is haggling with a car dealer on the price of a used car. If the dealer is getting a bonus per sale made, in addition to the commission, the storekeeper’s

Disagreement value increases

Eagerness to agree increases

Disagreement value decreases

Both B&C

2.5 points

QUESTION 20

Jim is haggling with a car dealer on the price of a used car. If the dealer is getting a bonus per sale made, in addition to the commission, Jim is more likely to be able to

Walk away from the deal

All of the above

Pay a higher price for the car

Get the car cheap

2.5 points

QUESTION 21

To save on negotiation costs when buying a car

Always go towards the end of the day, when the seller does not get a chance to make a counteroffer

Threaten to leave if the car dealer says anything but yes to your offer

Carry only one cashier’s check that cannot be modified

All of the above

2.5 points

QUESTION 22

Use questions 16- 27 use the following setup

Consider a sequential game between a shopkeeper and a haggling customer. The party who moves first chooses either a high price ($50) or low price ($20) and the second mover either agrees to the price or walks away from the deal and neither party gets anything. Ignore costs and assume the customer values the item at $60.

If the customer moves first, with a low price what is the best response of the shopkeeper

Shut down your store

Accept the low price

Walk away from the deal

Throw the haggling customer out of your store

2.5 points

QUESTION 23

Use questions 16- 27 use the following setup

If the customer moves first with a high price what is the best response of the shopkeeper

Throw the haggling customer out of your store

Walk away from the deal

Accept the high price happily

Laugh at the customer’s face

2.5 points

QUESTION 24

Use questions 16- 27 use the following setup

Looking ahead to how the shopkeeper is more likely to respond what price should the customer more likely to quote?

Low price

A compromised price between the high and the low

Let the shopkeeper quote the price

High price

2.5 points

QUESTION 25

Use questions 16- 27 use the following setup

If the shopkeeper goes first and quotes a low price, what is the best response of the customer?

Laugh at the storeowner

Walk away from the deal

Accept the low price happily

Slam the storeowner’s door on the way out

2.5 points

QUESTION 26

Use questions 16- 27 use the following setup

If the shopkeeper goes first and quotes a high price, what is the best response of the customer?

Yell at the store owner

Swear off shopping forever

Walk away from the deal

Accept the high price

2.5 points

QUESTION 27

Use questions 16- 27 use the following setup

This sequential game illustrates a

Second mover advantage

No advantage based on moves

First mover advantage

Third mover advantage

2.5 points

QUESTION 28

Use questions 16- 27 use the following setup

Suppose the shopkeeper is known to usher low bidders out of the store even if it means giving up the sale. If the customer moves first, he would

Get ushered out of the store

Offer the high price

Offer the low price

All of the above

2.5 points

QUESTION 29

Use questions 16- 27 use the following setup

Suppose this customer is known to throw a fit and scare away other customers if charged high prices. If the shopkeeper moves first, he would ask for

A high price

A low price

A pony

All of the above

2.5 points

QUESTION 30

Use questions 16- 27 use the following setup

Would the customer be able to convince the shopkeeper that he would walk out if he receives a high price?

Yes, because walking out is most profitable move for the customer

No, because walking out is an unprofitable strategy for the customer

No, because walking out is not a credible threat

Both B&C

2.5 points

QUESTION 31

Use questions 16- 27 use the following setup

Would the shopkeeper be able to convince the customer that he would usher the customer out if he gets a low price?

Both B&C

Yes, such threats are always credible

No, because losing the sale is not in the shopkeeper’s best interest

No, because he would get more by accommodating the low price than losing the sale

2.5 points

QUESTION 32

Use questions 16- 27 use the following setup

In the strategic view of bargaining the outcome depends on

Who makes the first move

Who can commit to a position

Whether or not the other party can make a countermove

All of the above

2.5 points

QUESTION 33

When buying a car from a dealership, to get the best bargain

Allow the dealership to make the first offer

Keep a cushion of bargaining space in the quoted price

Make a take it or leave it offer

All of the above

2.5 points

QUESTION 34

When buying a car from a dealership, to get the best bargain

Threaten to walk out if the dealer does not accept your offer

Allow room for bargaining

Quote your highest willingness to pay

Never stick to the first offer you make

2.5 points

QUESTION 35

When buying a car from a commission salesman you improve your bargaining position by

shopping toward the beginning of the month

shopping when the showroom is empty of customers

shopping when the new model year cars have just arrived

shopping when the car lot has only few cars left unsold

2.5 points

QUESTION 36

When buying a car from a commission salesman you improve your bargaining position by

shopping when the car lot has many cars left unsold

shopping when the showroom is full of customers

shopping toward the beginning of the month

shopping when the new model year cars have just arrived

2.5 points

QUESTION 37

When buying a car from a commission salesman you improve your bargaining position by

shopping toward the end of the month

shopping when the car lot has very few cars left unsold

shopping when the new model year cars have just arrived

shopping when the showroom is full of customers

2.5 points

QUESTION 38

You are a restaurant owner buying vegetables from a local farmer. You recently found out that another one of the farmer’s clients, a competing restaurant has shut down, what would that do to your bargaining power?

Increase your bargaining power

Decrease your bargaining power

Not affect your bargaining power

None of the above

2.5 points

QUESTION 39

Which of the following will improve your bargaining position when contracting with a supplier

Your final product that includes this component becomes more profitable

You must only buy the raw material from your preferred supplier to ensure quality

You are better able to accommodate other suppliers’ brands

Two of your suppliers merge

2.5 points

QUESTION 40

Which of the following will improve your bargaining position with customers

The product your team produces has become more costly to produce

There are fewer close substitutes for the product your team supports

Your competitors have developed new products that contain more of the features that your team produces

New firms have entered the market with competing products for the ones your team produces

Higher sales prices

Lower sales prices

No sales

All of the above

Explanation / Answer

Ans. 1. Lower sales prices (By offering low prices, they can easily met their sales goal)

Ans 2. Forced the union to choose the best response in the firm’s best interest

Ans 9. All of the above.

Ans 10. All of the above.

Ans 11. Accomodate

Ans 12. The first mover has an advantage

Ans 13. The storekeeper's disagreement value increased

Ans 14. He gets an offer from another seller

Ans 15. Jim has lower chances of having his offer accepted, since the seller has more outside offers

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