ECN 601 Week 6 Problems: Chapter 17. 19 and 20

(ECN 601 Week 6 Problems, ECN 601 Week 6 Problems, ECN 601 Week 6 Problems)

ECN 601 Week 6 Problems: Chapter 17

1. Question: The expected value of an uncertain outcome is:
2. Question: If your uncle offers you a deal with an … value much greater than your cost to take part:
3. Question: You have to choose between risky options A and B. You calculate the … value of A is greater than the expected value of B by am3%. Your likely course of action is:
4. Question: You have to decide whether to sell widgets for $5 or $6 when your marginal cost is $3. In the past, you have had 15% success making the sale at the $5 price and only io% success at the $6 price:
5. Question: You have to decide whether to sell widgets for 85 or s6 when your marginal cost is $3. In the past, you have had 15% success making the sale at the $5 price and only io% success at the $6 price. You might increase your profits by:
6. Question: Selection bias occurs:
7. Question: Randomized experiments represent the “gold standard” in data analytics because:
8. Question: The key determinant of a careful observational study is:
9. Question: If your analysis leads you to reject a hypothesis that is actually correct:
10. Question: A manager will decide to fund too few projects with uncertain outcomes if:
11. Question: The difference between risk and uncertainty is:
12. Question: A way to deal with uncertainty is:
13. Question: The expected value of a gamble that pays $10 with probability 0.2 and $-4 with probability o.8 is:
14. Question: It will exceed the average profits with probability o.3, will meet profit expectations with probability 0.5, and will fail with probability o.2. It will generate net present value of profits of $5oo,000 if it exceeds expectations, $ioo,000 if it meets expectations, and $-400,000 if it fails. What are the expected profits from the new plant?
15. Question: Gamble A pays $100 with probability 4o% and $-3o with probability 6o%. Gamble B pays $16o with probability 3o% and $-4o with probability 70%. Which would you choose as the higher expected value?
16. Question: Market research shows that there high-value customers are willing to pay $200 for your house cleaning service and low-value customers are willing to pay $175. High value types represent 4o% of the population. If marginal cost is $ioo, at the optimal price, what are your expected profits per customer?
17. Question: Market research shows that there high-value customers are willing to pay $20o for your house cleaning service and low-value customers are willing to pay $175. High value types represent 4o% of the population. If marginal cost is $1.00, which is the optimal strategy?
18. Question: When there are no systematic differences between treatment and control groups:
19. Question: In observational studies:
20. Question: Managers who can get more projects approved and oversee more assets get promoted faster. When making proposals to headquarters for new projects, these managers tend to develop support with analyses they perform.
21. Question: Based on expected error costs, you calculate that you should fund a project if it has better than a 6o% chance of success. Your analy tics team … three different studies resulting in estimates of the probability of success at 65%, 71% and 58%:
22. Question: When devising a strategy with considerable uncertainty:
    

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ECN 601 Week 6 Problems: Chapter 19

1. Question: If you are risk averse:
2. Question: Those who choose to insure against theft
3. Question: When farmers sell forward contracts in spring for the harvest they will reap in Autumn:
4. Question: People are more willing to buy an insurance product when:
5. Question: If an insurance company cannot distinguish between the riskiness of potential customers, then:
6. Question: When offering insurance to groups with different risk profiles:
7. Question: Screening:
8. Question: Signaling:
9. Question: For signaling to work in insurance:
10. Question: E-commerce platforms, like Amazon.com, restrict their sites to high quality sellers by:
11. Question: If an insurance customer is risk averse, that the amount she would pay to avoid a 5o% probability of a loss of $100 at:
12. Question: Insurance markets create value because:
13. Question: Future markets shift risk by:
14. Question: Two equal sized groups of potential insurance customers have risks of heart disease of io% and 15% but you cannot tell them apart:
15. Question: You are hiring for an entry-level tech support position where the starting salary range tends to … $40,000 to 850,000 per year. If you advertise a salary at the average of $45,000.
16. Question: All of the following are screens for quality except:
17. Question: For a screen to profitably inform the less … party about quality:
18. Question: All of the following are examples of signals of quality except:
19. Question: For signaling to work:
20. Question: Adverse selection is … in e-commerce markets by all of the following except:
    

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ECN 601 Week 6 Problems: Chapter 20

1. Question: Moral hazard occurs when:
2. Question: Examples of Moral hazard are:
3. Question: Insured customers:
4. Question: Examples of insurance companies protecting themselves against moral hazard are:
5. Question: If moral hazards exist in social markets:
6. Question: Which of the following are examples of moral hazard:
7. Question: The difference between moral hazard and adverse selection is:
8. Question: Shirking on the job is version of moral hazard:
9. Question: When manager choose to allow workers to engage in some shirking, it is because:
10. Question: Moral hazard occurs in lending because:
11. Question: To avoid moral hazard in lending, lenders try to:
12. Question: Foreclosure protection for homeowners and expanding borrower rights in the aftermath of the financial crisis:
13. Question: Progressive’s Snapshot address moral hazard by:
14. Question: Examples of moral hazard are:
15. Question: Insurers protect themselves from moral hazard by:
16. Question: When insurance companies cannot tell if customers are taking appropriate precautions:
17. Question: The difference between moral hazard and adverse selection is:
18. Question: Which of the following examples of moral hazard:
19. Question: Exerting the appropriate effort to make a sale versus shirking will cost a salesman the equivalent of 840 and will increase her sales effectiveness from 2o% to 40%:
20. Question: If you develop a cheap, new monitoring mechanism that reduces the amount of shirking by workers:
21. Question: A lender offers a low interest rate to a firm because the … project has a high probability of success.
22. Question: When a bank’s loans begin to default, the equity stake in the bank decreases and the bank may engage in moral hazard by making risky loans. A preferable solution is to: