ch15 - File: Ch15; CHAPTER 15: Bargaining and Negotiation...

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File: Ch15; CHAPTER 15: Bargaining and Negotiation Each question contains a code showing the section of the chapter text from which it was taken. The codes for this chapter are: Code Section 1 The Economic Sources of Beneficial Agreements 2 Multiple-Issue Negotiations 3 Negotiation Strategy MULTIPLE CHOICE 1. The term “bilateral monopoly” refers to a) A monopolist that sells in two different markets. b) A duopoly marked by collusion. c) A single seller engaged in negotiations with a single buyer. d) A monopoly that requires only two inputs. e) A monopolist that sells a pair of products. ANSWER: c SECTION: 1 2. The maximum value a buyer sets for a transaction is its a) Aspiration level. b) Reservation price. c) Acceptable price. d) Sale price. e) Market price. ANSWER: b SECTION: 1 3. The size of the zone of agreement measures a) The difference between the seller’s and buyer’s profits. b) The average of the parties’ walk-away prices. c) The total trading profits. d) The difference between the buyer’s and seller’s walk-away values. e) Answers c and d are both correct. ANSWER: e SECTION: 1 4. Given buyer and seller reservation prices of $40,000 and $60,000, respectively, a) The total available profit to the two parties is $20,000. b) A price of $50,000 generates an equitable agreement. c) The size of the zone of agreement is $20,000. 15-1
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Bargaining and Negotiation d) A zone of agreement does not exist. e) Answers a, b, and c are all correct. ANSWER: d SECTION: 1 5. The outcome of a negotiated agreement is deemed efficient if a) Neither the buyer nor the seller receives more than 60% of the profits. b) The sum of the buyer's and seller's profit shares is less than 100%. c) The agreement equitably balances both sides’ interests. d) Both parties benefit from the agreement (relative to their walk-away options). e) No other agreement exists which would make one party better off without making the other worse off. ANSWER: e SECTION: 1 6. The price at which an agreement occurs is a matter of a) Arbitration. b) Competition. c) Cooperation. d) Answers b and c are both correct. e) None of the above answers is correct. ANSWER: d SECTION: 1 7. A distributive bargain is one in which a) Bargaining occurs over each party's share of total profits. b) Total profits are distributed equally to the participating parties. c) Arbitration determines the distribution of total profits. d) Wage negotiations occur between management and labor. e) Multiple issues are at stake. ANSWER: a SECTION: 1 8. Total trading gains available in a negotiation are influenced by a) The negotiating skills of the bargainers. b) The parties’ walk-away options. c) Differences in the parties’ probability assessments. d)
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ch15 - File: Ch15; CHAPTER 15: Bargaining and Negotiation...

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