ECO 550 Week 7 QuizClick this link to get the tutorial:http://homeworkfox.com/tutorials/economics/4283/eco-550-week-7-quiz/Question 11. Which of the following remedies can be used to prevent the beekeeper and the farmer frombreaking the contract?Separating the ownership and management of the bees and trees.Merging the ownership and management of the bees and the trees.Providing the farmer a larger share of the net benefit received from the contract.Providing the bee keeper a larger share of the net benefit received from the contract.Question 21. Which of the following exemplifies inefficient legal assignment of rights with hightransaction costs?Agreement between an orchard farmer and a beekeeper.LoJack installation in cars to prevent car theft.The Huntington Beach oil wells.Installation of smog control in cars.Question 31. Which of the following is an aim of a price-fixing agreement?Reducing entry barriersIncreasing profitReducing priceIncreasing demand
Question 41. How can the government cut the cost of negotiation among car owners regarding LoJackinstallation?The government can impose a quota on the import of LoJacks.The government can invite public opinion on LoJacks.The government can limit the number of companies producing LoJacks.The government can randomly select cars to install LoJacks.Question 51. Which of the following was an outcome of uncoordinated oil drilling in Huntington Beach,California? AnswerThe entire oil present underground had been extracted within few years.Underground oil pressure had increased due to excessive drilling leading to an oil spill into theadjacent sea.A majority of the oil could not be drilled out as low underground pressure prevented oil fromreaching the surface.The oil belt suffered frequent earthquakes as excessive drilling had loosened the soil bonding.Question 61. Which of the following is a new law on fishing imposed by the government to increase thetotal supply of fish?Holders of fishing rights are not allowed to resell them to others.Governments have issued licenses that limit catches and fishing seasons.Quotas have enforced higher catches in coastal areas.Governments around the world have reduced their offshore jurisdictions.Question 71. In a society, if negotiation among parties leads to a politically unsatisfactory distribution ofincome:
the legislature can enact laws to redistribute this income.the society can on its own reallocate resources to bring about a politically satisfactory outcome.the parties will renegotiate until they reach a politically satisfactory outcome.the parties will refuse to carry out future transactions.Question 81. Government has the power to reduce the _____ associated with air pollution by automobilesbecause it can force changes in car design, can impose taxes on drivers, and has the power topunish those who fail to comply.Answerprivate costtransaction costopportunity costpositive externalityQuestion 91. Assume that the market for executive travel is perfectly competitive. If the availability oftime-sharing reduces transaction costs and the owner’s cost of negotiating for a single trip, whichof the following situations must occur?The hours of flight available will increase.The hours of flight available will decrease.The cost of flying will remain steady.The cost of flying will increase.Question 101. If the costs of negotiating and enforcing contracts are _____ relative to the benefits, buyersand sellers have incentives to make economically efficient arrangements that _____ value.high; increaselow; increasehigh, decrease
low; decreaseQuestion 111. According to Coasian reasoning, if negotiation is costless:Answerirrespective of the initial distribution of rights, the efficient outcome will minimize the netbenefit of the group.the efficient outcome will minimize the net benefit of the individual who has more rightscompared to the others in the group.irrespective of the initial distribution of rights, the efficient outcome will maximize the netbenefit of the group.the efficient outcome will maximize the net benefit of the individual who has more rightscompared to the others in a group.Question 121. According to economists, an individual who tries to derive utility from the consumption of agood without paying for it is called:Answera utility maximizer.a free rider.an opportunist.a profit maximizer.Question 131. Inclusive property rights provide an investor:Answermore options and greater incentives to avoid inefficient choices.an insight to future earnings and revenue generation.a definite return on the investment.cost effective techniques of production leading to economies of scale.Question 14
1. The cash or concessions present in contract terms that parties agree to in order to share risksare called: Answerquid pro quos.property rights.flexible takes.contract prices.Question 151. Which of the following is an example of an obligation associated with a right?AnswerProviding adequate notice period to your tenants to vacate your house.Allowing your kids to play with other children in the neighborhood.Allowing neighbors to use your lawn to maintain healthy public relations.Providing proper education and adequate nutrition to your children.Top of Form 1Question 162. A travel agency enters into a contract with a hotel chain which gives it priority access to 25percent of its rooms in major tourist destinations throughout the year. The contract encouragesthe hotel chain to increase the number of rooms in each of these hotels. The investment made bythe hotel chain corresponds to which of the following aspects of specificity?Task specificityLocational specificityDedicated specificityHuman specificityQuestion 172. If parties to a contract can anticipate the court’s decision in the event of a dispute with somedegree of certainty:opportunistic behavior will never be detected.
opportunistic behavior will be partially detected.there will be less room for opportunism.only one of the parties will be able to act opportunistically.Question 182. Refer to Table 10-1. What would be the combined gain of the two if both breach theunitization contract?The matrix given below represents the payoffs to oil well owners Mike and Frasel if they enterinto a unitization contract. Each of the owners know the exact amount of oil in the pool and themarket price of oil.Table 10-1$22$20$28$32Question 192. Fixing a payment schedule in an agreement:allows the seller to easily access loanable funds.increases the uncertainty associated with the cost of production.allows the seller to charge a high price for his product.ensures the delivery of goods at a high price.Question 202. Which of the following can be classified as a highly specific asset?A country’s soldiersA wind turbine in an installation that produces "renewable" electricityA cattle farm
A cruise shipQuestion 212. Suppose Jonah and Carlos have a contract, which Carlos chooses to breach. Jonah sues, and acourt orders Carlos to pay him the amount he expected to gain at the time they made the contract,net of any amount he actually did receive after the breach. The form of payment which the courtspecifies in this example is called:a contingent fee.a specific performance.a capitation.expectation damages.Question 222. Which of the following is a legal remedy for a breach of the contract between parties?Liquidated damagesImprisonmentUnitizationSpecificityQuestion 232. Refer to Table 10-1. Under expectation damages, Frasel’s breach of the contract would lowerhis net payoff to:The matrix given below represents the payoffs to oil well owners Mike and Frasel if they enterinto a unitization contract. Each of the owners know the exact amount of oil in the pool and themarket price of oil.Table 10-1$6.$8.$16.$10.
Question 242. _____ is an example of human specificity which raises the risks associated with opportunism.Car insurance purchased by an individual for his/her favorite car.Investment of an employer in company-specific skills.Purchasing immovable machines for a particular facility.Investment in research and developmentQuestion 252. Escalators present in a contract must state:at what interval the contract price should automatically change at a fixed rate.when the price will change and by what formula the new price will be calculated.when the contract should be terminated and how the cost of termination should be shared.when the contract should be renewed and the terms governing the renewal.Question 262. Which of the following will be an efficient payment scheme for a defendant’s attorney, whois experienced in handling similar cases in the past?Contingency feesCapitation feesHourly billingQuality based billingQuestion 272. A payment arrangement between an attorney and a plaintiff, in which the plaintiff agrees topay a certain lump-sum amount at the outset and no more in the future, regardless of how thecase develops is called:contingency fees.capitation fees.
liquidation.one-time settlement.Question 282. Which of the following examples can be associated with the task specificity aspect of anasset?An employer’s investment in employee skill building.Purchasing machines which can be used to produce only a particular product.Building a facility in a low cost locality.An employer’s investment in office renovation.Question 292. _____ is a contract that specifies actions to be taken if various situations come to prevail.An insurance policyContingencyUnitizationAn escalatorQuestion 302. Which of the following may require the parties to renegotiate certain parts of a contract ifmarket conditions change drastically?AnswerTermination clauseOmnibus clauseAdjustment clauseReopener clauseBottom of Form 1