BIE exam 9 September 2021 Solutions

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Date September 9, 2021 Exam Business and Industrial Economics [Professor P. Garrone] Solutions Multiple-choice questions (10 points) 1. The concentration vectors of large food manufacturers in two Regions are as follows: S_A = [0.3, 0.2, 0.15, 0.15, 0.15, 0.05]; S_B = [0.25, 0.25, 0.25, 0.25] a. for sure food manufacturing in Region A is more concentrated than in Region B b. based on Herfindal-Hirschman index, food manufacturing in Region B is more concentrated than in Region A c. based on Herfindal-Hirschman index, food manufacturing in Region A is more concentrated than in Region B d. food manufacturing in Region B is more concentrated than in Region A because there are fewer firms in B than in A 2. Consider a labor market where workers can signal their high ability (productivity) by acquiring education, and workers are paid according to their productivity a, conditional on their education level e (years of education). If a worker does not signal his/her ability through education, he/she is considered a low - ability worker. The productivity of high-ability workers is aH = 10 and their unit (yearly) cost of education is cH = 2, while the productivity of low-ability workers is aL = 2 and their unit cost of education is cL = 4. Which of the following levels of education e* allows high -ability workers to credibly signal their ability on the labor market? a. e* = 1 b. e* = 3 c. e* = 5 d. e* = 10 3. Non-profit organizations are appropriate service providers a. when consumers suffer from information asymmetries and service provision is hard to monitor b. when consumers suffer from information asymmetries but service provision is easy to monitor c. when consumers do not suffer from information asymmetries and service provision is easy to monitor d. when consumers do not…