Econ 464 Spring 2006 Study Questions for Final The final questions are going to look like the questions below. (6-7 similar or exactly same questions) 1) Why almost-new used cars are sold for significantly less than brand new cars? 2) Patent counts are a measure for innovative activity. US has the lead on the patent-count in the world. What might be the reason for that? 3) Pirate copies of the software, music records and movies are more prevalent in the countries at which innovative activity is not widespread. Why? 4) Would you expect the prices online to be lower than traditional retailers, why or why not? 5) Would you expect the price spread to be lower online than traditional retailers, why or why not? 6) American Online (a communications company in US) bought ICQ (one of the earliest instant messaging software) for a really significant amount of money. Considering ICQ technology was already known and implemented by the many others, why do you think American Online was willing to pay that much money for ICQ? 7) Movies are initially shown on movie theaters. After couple of months or years VCD’s of these movies are released and sold for considerably less. Finally the same movies are offered on TV channels for free. What is the rationale for that type of distribution mechanisms? 8) If you own a monopoly in a durable good market, would you rather rent or sell your products? 9) Define the asymmetric information problem on credit cards market. How can private markets find solutions for this problem? Recently government put a limit on the interest rates on credit cards, how would this limit affect the market? 10) Developed countries put pressure on developing and underdeveloped countries to increase the level of protection of intellectual property rights. This is especially emphasized for pharmaceutical and software industries. Until recently developing and underdeveloped countries were not offering any protection for software and pharmaceutical innovations which were developed in rich countries. Turkey agreed to increase its protection level to the developed nations for pharmaceuticals and software. Analyze the effects of that decision to the welfare of Turkey and welfare of developed countries. 11) In small touristics towns generally natives and tourists pay different prices for the identical prices. Which group pays higher prices and why? Compare the average price level in touristic and non-touristic towns and why is there a discrepancy? 12) In early 1980s when Microsoft was first entering computer operating system market with Windows, the Microsoft Management did not take any serious action to prevent pirate copies of Windows. Only after Microsoft gained a significant market share, they started to do so. Why? 13) Turkish government is planning to privatize power (electricity) distribution. According to a proposed plan, the country will be divided into geographical regions such as Istanbul Region, Doğu Karadeniz Region, Güney Ege Region etc… Each region’s distribution rights will be auctioned off. If you were responsible on this process, what issues would you consider on implementing this privatization? What type of auction would you use and why? 14) Software producers generally offer several versions of the same product such as Office Home and Office Professional. Even though there are no cost differences, they are priced differently and the consumers who doesn’t pay higher price are excluded from using a higher quality version. Why do the software companies do that and is it efficient?