PRACTICE EXAM

DLBBWME01_E 2837
EXAMID: 894230

On multiple choice questions there is exact one right answer. Please check the right answer. You are permitted to check only one answer. If you check more than one correct
answer you will get 0 points. If you check the right answer you will get maximal points. Exam note cross must be set correctly.

QUESTION 1 OF 10
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A company halves the use of all its production factors.

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If the output quantity is subsequently also reduced by half, then there are…

a
Select one:

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constant returns of scale.
decreasing returns of scale.

e
economies of scale.

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increasing returns of scale.
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QUESTION 2 OF 10
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Which behavioral economic principle can be used to explain why homeowners demand too high a price for their house
that buyers are not willing to pay?
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Select one:

Limited rationality
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Endowment effect
Framing
Ultimatum game
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1/16 (c) IU
DLBBWME01_E 2837
EXAMID: 894230

QUESTION 3 OF 10
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Hidden properties can lead to…

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Select one:

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ex ante moral hazard.
ex post moral hazard.
adverse selection.

e
complete information.

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QUESTION 4 OF 10
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What kind of game is skat?

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Select one:
am

Play with perfect information

Game with imperfect information
Cooperative play
Ex

Simultaneous play
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2/16 (c) IU
DLBBWME01_E 2837
EXAMID: 894230

QUESTION 5 OF 10
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Which statement is based on a normative analysis?

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Select one:

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The expansion of renewable energy sources has led to higher electricity prices for end consumers.
The coal phase-out is associated with weaker economic growth in the coming years.
The German government should adhere to the emission targets set out in the Paris Climate

e
Protection Agreement.

nc
Taxing CO2 emissions will lead to a reduction in air travel.
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QUESTION 6 OF 10
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Katharina travels both by public transport and by car, though public transport is an inferior good and driving a car a
normal good.
What happens if Katharina's budget increases by 10% while the prices for public transport and driving remain constant?
am

Answer option 1: Katharina drives less car.

Answer option 2: Katharina travels less by public transport.
Ex

Select one:

Neither answer option 1 nor answer option 2 is correct.

e

Only answer option 2 is correct.

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Both answer option 1 and answer option 2 are correct.

Only answer option 1 is correct.
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3/16 (c) IU
DLBBWME01_E 2837
EXAMID: 894230

QUESTION 7 OF 10
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Consider the following sequential product selection game in which two car manufacturers are faced with the decision of

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whether to introduce a new sports car or a new SUV, and determine the Nash equilibrium. Note that Manufacturer A
introduces its vehicle first (i.e., has the first move) and Manufacturer B introduces theirs later. The first number at each

a
node shows the outcome (profit) for Manufacturer A and the second number for Manufacturer B.

Le
e
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am

Select one:

The Nash equilibrium results when Manufacturer A first introduces a sports car and Manufacturer
B then introduces an SUV.
Ex

The Nash equilibrium results when both manufacturers introduce an SUV.

The Nash equilibrium results when both manufacturers introduce a sports car.
e

The Nash equilibrium results when Manufacturer A first introduces an SUV and Manufacturer B
tic

then introduces a sports car.

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4/16 (c) IU
DLBBWME01_E 2837
EXAMID: 894230

QUESTION 8 OF 10
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Describe the difference between a cooperative and a non-cooperative game. Give one example each.

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5/16 (c) IU
DLBBWME01_E 2837
EXAMID: 894230

QUESTION 9 OF 10
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In each case, name one difference and one common feature between the market form of full and monopolistic

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competition.
In which market form are companies most likely to invite customers to exclusive evening events that are free of charge to

a
attend?

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Explain what they hope to achieve.

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DLBBWME01_E 2837
EXAMID: 894230

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DLBBWME01_E 2837
EXAMID: 894230

QUESTION 10 OF 10
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Consider the following statement:

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"A flea market always sells both working and non-working radios even if there is no electricity to test the functionality of
used radios."

a
Explain why this statement is incorrect, citing the information-economical phenomenon that can occur at a flea market for

Le
used radios.
Also, explain whether it is screening or signaling when a dealer of used radios brings batteries so that buyers can be
convinced of the functionality. Finally, define the appropriate term (signaling or screening).

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DLBBWME01_E 2837
EXAMID: 894230

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EXAMID: 894230

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EXAMID: 894230

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EXAMID: 894230

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EXAMID: 894230

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EXAMID: 894230

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EXAMID: 894230

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EXAMID: 894230

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