Suppose you are given S100 in period I (today), $200 in period 2, and $300 in period 3. Given an interest rate of 5% (i.e., r= 0.05), the present value of this stream of payoffs is closest to: A. $600 В. S580 C. $560 D. $500 [8] 0.75. Suppose the rate of interest (r) equals 0.25 (i.e., 25%). Accordingly, the discount factor (ö) equals A. True В. False [9] Cooperation among fims tends to be more difficult when: there are short retaliatory lags. firms sell differentiated products. when an industry trade association exists. All of the above А. В. C. D. (10] Suppose a retail seller ofjeans currently has 40 customers. The retailer offers the following quantity discount to these 40 customers. Buy the 1" pair of jeans at a price of S100, buy a 2ªd pair of jeans at a price of $80, buy a 3 pair of jeans at a price of S60, and buy a 4* pair of jeans at a price of $40. Suppose the cost to the retailer for each pair of jeans is $40. Suppose of these 40 customers, all buy the l* pair of jeans, 30 of these 40 buy a 2 pair of jeans, 20 of these 30 (i.e., those who bought a 2ª pair) buy a 3" pair, and 10 of the 20 (i.e., those who bought a 3ª pair) buy a 4° pair. The profit to the retailer from selling jeans to these 40 customers in this way equals: A. $4000 В. $4600 C. $6200 D. None of the above [11) In the case of first degree price discrimination, cach consumer is charged his/her reservation price. True False A. В. (12] The "revolving door" is used as an explanation for why: A. it is easier for firms to enter and exit the building industry. it is easier for firms to enter and exit a market in which incumbents practice predatory pricing. the discount factor tends to be close to zero as individuals "enter" life but then tends to be close to В. С. one as individuals "exit" life. D. regulators become captured.

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