ECO 550 Final Exam (36 Questions with Correct Answers)
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Question 28<br />
Which of the following are not approaches to resolving the principal-agent problem?<br />
Answer<br />
ex ante incentive alignment<br />
deferred stock options<br />
ex post governance mechanism<br />
straight salary contracts<br />
monitoring by independent outside directors<br />
Question 29<br />
The lower the barriers to entry and exit, the more nearly a market structure fits the ____ market<br />
model.<br />
Answer<br />
monopolistic competition<br />
perfectly contestable<br />
oligopoly<br />
monopoly<br />
Question 30<br />
Industry A has market shares of 50, 30, and 20. Industry B has market shares of 45, 40, and 15.<br />
Hint: HHI = Σ (si2), where si is the market shares of the i-th firm in the industry.<br />
Answer<br />
The Herfindahl index for A is 100.<br />
The Herfindahl index for A is 3,800.<br />
The Herfindahl index for B is 3,600<br />
The Herfindahl index for A is greater than for B.
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