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Economics 404 Spring 2016 Industrial Organization and Data Science Final Exam Your Name: Multple Choice (2 poinTs each, 20 poinTs ToTal) 1) The artcle by Paul Klemperer on ±he reading lis± ex±ensively discussed examples of: a. Timber auctons b. Use car auctons c. eBay auctons d. Elec±romagnetc spec±rum auctons 2) Collusion ±ends ±o be more common: a. When bidder identfy is revealed b. In repea±ed auctons c. In ascending auctons d. All of ±he above Coefcients: Estimate Std. Error t value Pr(>|t|) (Intercept) 10.44751 0.01846 565.853 < 2e-16 *** log(price) -3.49702 0.02470 -141.608 < 2e-16 *** log(lag1price) 1.00952 0.02536 39.803 < 2e-16 *** log(lag2price) 0.09779 0.02440 4.008 6.13e-05 *** brandminute.maid 0.65547 0.01415 46.319 < 2e-16 *** brandtropicana 1.13475 0.01971 57.578 < 2e-16 *** 3) The coeFcien± on log(lag1price) ±ell us: a. A 1% increase in ±he price las± week leads ±o a 1% increase in ±he quant±y sold ±his week. b. A 1% increase in ±he price las± week leads ±o a 1% decrease in ±he quant±y sold ±his week c. A 1% increase in ±he price las± week leads ±o a 2.49% increase in ±he quant±y sold ±his week d. A 1% increase in ±he price las± week leads ±o a 4.49% decrease in ±he quant±y sold ±his week 4) One of ±he mos± impor±an± di²erences be±ween freemium and ±raditonal versioning is: a. In freemium, ±here are only 2 versions of ±he produc±. b. In freemium, users usually move ±o ±he higher version(s) from wi±hin ±he produc±, whereas in ±raditonal versioning ±his choice occurs a± tme of purchase. c. ³reemium is used by s±ar±-ups, ±raditonal versioning is used by older companies d. In freemium, ±he goal is ±o charge high value users a higher price 5) “Double marginalizaton”… a. Can lead ±o higher prices in ±he downs±ream marke± ±o consumers b. Occurs when ups±ream ´rms mark-up wholesale prices, which downs±ream ´rms subsequen±ly mark-up again. c. Can be solved using ±wo-par± ±ari²s d. All of ±he above
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Economics 404 Spring 2016 6) Lasso and Ridge regression are a. Popular because the coefcient esTmates are unbiased b. Similar to regression trees in that they are non-parametric c. A type oF regression that shrinks coefcients to avoid over±²ng d. EsTmated in R using the LM FuncTon 7) Alaska Airlines and Virgin America recently announced a proposed merger. Both airlines ³y primarily on the West Coast. ´his is an example oF a: a. VerTcal merger b. Horizontal merger c. ´wo-part tariµ d. ¶oreclosure merger 8) Alaska Airlines and Virgin America recently announced a proposed merger. Both airlines ³y primarily on the West Coast. ´he airlines claim this merger will reduce operaTng costs due to operaTng efciency. IF this is really true and there are no changes to the level oF compeTTon (perhaps not realisTc but assume that there is no change), then: a. Prices are expected to rise over Tme b. Prices are expected to Fall over Tme c. Prices are expected to remain constant over Tme d. Not enough inFormaTon given 9) Goods like clothing (e.g. stores in malls like Banana Republic) tend to have predictable sales at certain points in the year where prices are 30-50% oµ (e.g. “Memorial Day Sale”). Goods like cars do not tend to have predictable sales oF this nature. What best explains this Fact? a. People expect car prices to go down over Tme b. Clothing has very low storage costs c. People tend to be more paTent when buying expensive items such as cars d. Clothing is a non-durable good 10) What is the opTmal internal price to set For goods “sold” From one division oF a ±rm to another (internal transFer prices): a. Set price to saTsFy: P MC P = 1 elasticity b. MC + FC TotalUnits (marginal cost + average ±xed costs) c. MC d. ´he best pracTce depends on the industry Short Answer (3 points each, 36 points total) 1) Give 3 reasons to use an aucTon vs. se²ng a “take it or leave” posted price.
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Economics 404 Spring 2016 Industrial Organization and Data Science Final Exam
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1) Auction allows for competitive bidding compared to take or leave approach. Auction...

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