Question 1

A "sequential game" is

Accepted Answer

A)  another term for a repeated game. 
B)  another term for a cooperative game. 
C)  the term for a game in which individuals receive their payoffs at different times. 
D)  the term for a game in which individuals do not commit to strategy choices at the same time. 
E)  the term for a game in which each outcome occurs, one after the other, as the game is repeated over time. 
A)  another term for a repeated game. 
B)  another term for a cooperative game. 
C)  the term for a game in which individuals receive their payoffs at different times. 
D)  the term for a game in which individuals do not commit to strategy choices at the same time. 
E)  the term for a game in which each outcome occurs, one after the other, as the game is repeated over time.

Question 2

Consider the Matching Pennies game:
 
Suppose both players use maximin strategies for this game. Is there a clear equilibrium outcome to the game in this case?

Accepted Answer

A)  Yes, both players select heads 
B)  Yes, both players select tails 
C)  No, both players face the minimum payoff (-1) under both actions. 
D)  We do not have enough information to answer this question. 
A)  Yes, both players select heads 
B)  Yes, both players select tails 
C)  No, both players face the minimum payoff (-1) under both actions. 
D)  We do not have enough information to answer this question.

Question 3

Which of the following is NOT a key component of every game?

Accepted Answer

A)  Strategies 
B)  Players 
C)  Payoffs 
D)  Cooperation 
A)  Strategies 
B)  Players 
C)  Payoffs 
D)  Cooperation

Question 4

Mitchell Electronics produces a home video game that has become very popular with children. Mitchell's managers have reason to believe that Wright Televideo Company is considering entering the market with a competing product. Mitchell must decide whether to set a high price to accommodate entry or a low, entry-deterring price. The payoff matrix below shows the profit outcome for each company under the alternative price and entry strategies. Mitchell's profit is entered before the comma, and Wright's is after the comma.   
a. Does Mitchell have a dominant strategy? Explain.
b. Does Wright have a dominant strategy? Explain.
c. Mitchell's managers have vaguely suggested a willingness to lower price in order to deter entry. Is this threat credible in light of the payoff matrix above?
d. If the threat is not credible, what changes in the payoff matrix would be necessary to make the threat credible? What business strategies could Mitchell use to alter the payoff matrix so that the threat is credible?

Accepted Answer

a.
Mitchell's dominant strategy is the h

Question 5

When, in the game in Scenario 13.14, the strategy that would not be chosen under any circumstances is removed, what is left is a

Accepted Answer

A)  Battle of the Sexes game. 
B)  Matching Pennies game. 
C)  Prisoners' Dilemma game. 
D)  Beach Location game. 
E)  constant-sum game. 
A)  Battle of the Sexes game. 
B)  Matching Pennies game. 
C)  Prisoners' Dilemma game. 
D)  Beach Location game. 
E)  constant-sum game.

Question 6

Scenario 13.4
Consider the following game:  
-In the game in Scenario 13.4, the equilibrium outcome:

Accepted Answer

A)  is for both NRG and Vita to sponsor the marathon. 
B)  is for both NRG and Vita to sponsor the TV show. 
C)  is for NRG to sponsor the marathon and Vita to sponsor the TV show. 
D)  is for NRG to sponsor the TV show and Vita to sponsor the marathon. 
E)  does not exist in pure strategies. 
A)  is for both NRG and Vita to sponsor the marathon. 
B)  is for both NRG and Vita to sponsor the TV show. 
C)  is for NRG to sponsor the marathon and Vita to sponsor the TV show. 
D)  is for NRG to sponsor the TV show and Vita to sponsor the marathon. 
E)  does not exist in pure strategies.

Question 7

Scenario 13.1:
You are negotiating with your florist over the price of flowers for your wedding. You value the floral arrangements at $500. The florist's cost for the arrangement is $200. You finally settled on a price of $250.
-Refer to Scenario 13.1. Your negotiations are an example of:

Accepted Answer

A)  a noncooperative game. 
B)  a cooperative game. 
C)  a constant sum game. 
D)  a competitive game. 
E)  both B and C 
A)  a noncooperative game. 
B)  a cooperative game. 
C)  a constant sum game. 
D)  a competitive game. 
E)  both B and C

Question 8

Andre Agassi, a star tennis player, is playing the number one player in the world, Roger Federer. Before the match, Agassi decided that he would serve 20 percent of his serves to Federer's backhand, 30 percent of his serves to Federer's forehand, and 50 percent of his serves straight at Federer. In the language of game theory, this is known as:

Accepted Answer

A)  a pure strategy. 
B)  a dominant strategy. 
C)  a mixed strategy. 
D)  a maximin strategy. 
A)  a pure strategy. 
B)  a dominant strategy. 
C)  a mixed strategy. 
D)  a maximin strategy.

Question 9

Scenario 13.15
Consider the pricing game below:  
-Which is true about dominant strategies in the game in Scenario 13.15?

Accepted Answer

A)  $80 is dominant for Simple; $70 is dominant for Boring. 
B)  $80 is dominant for Simple; $25 is dominant for Boring. 
C)  $35 is dominant for Simple; $70 is dominant for Boring. 
D)  $35 is dominant for Simple; $25 is dominant for Boring. 
E)  There are no dominant strategies in the above game. 
A)  $80 is dominant for Simple; $70 is dominant for Boring. 
B)  $80 is dominant for Simple; $25 is dominant for Boring. 
C)  $35 is dominant for Simple; $70 is dominant for Boring. 
D)  $35 is dominant for Simple; $25 is dominant for Boring. 
E)  There are no dominant strategies in the above game.

Question 10

Scenario 13.7:
Consider the game below about funding and construction of a dam to protect a 1,000-person town. Contributions to the Dam Fund, once made, cannot be recovered, and all citizens must contribute $1,000 to the dam in order for it to be built. The dam, if built, is worth $70,000 to each citizen.  
-Refer to the game in Scenario 13.7. If each player chose a maximin strategy, the outcome would be

Accepted Answer

A)  $69,000, $69,000. 
B)  $0, -$1000. 
C)  -$1000, $0. 
D)  $0, $0. 
E)  a mixed strategy equilibrium. 
A)  $69,000, $69,000. 
B)  $0, -$1000. 
C)  -$1000, $0. 
D)  $0, $0. 
E)  a mixed strategy equilibrium.

Question 11

Scenario 13.1:
You are negotiating with your florist over the price of flowers for your wedding. You value the floral arrangements at $500. The florist's cost for the arrangement is $200. You finally settled on a price of $250.
-Refer to Scenario 13.1. At your negotiated price the producer surplus is:

Accepted Answer

A)  $0. 
B)  $50. 
C)  $200. 
D)  $250. 
E)  $300. 
A)  $0. 
B)  $50. 
C)  $200. 
D)  $250. 
E)  $300.

Question 12

Scenario 13.14
Consider the game below:  
-In the game in Scenario 13.14,

Accepted Answer

A)  R's dominant strategy is Q = 100; C has none. 
B)  C's dominant strategy is Q = 100; R has none. 
C)  Q = 100 is a dominant strategy for both R and C. 
D)  Q = 100 dominates Q = 150 for both firms. 
E)  the dominant strategy for both players is to choose the same level of output, so long as it is not 150. 
A)  R's dominant strategy is Q = 100; C has none. 
B)  C's dominant strategy is Q = 100; R has none. 
C)  Q = 100 is a dominant strategy for both R and C. 
D)  Q = 100 dominates Q = 150 for both firms. 
E)  the dominant strategy for both players is to choose the same level of output, so long as it is not 150.

Question 13

Casey's General Store is considering placing a store in Hamilton, Missouri. If they place the store in Hamilton and no other convenience store enters the Hamilton market, they'll earn profits of $100,000 per year. If competitors do enter, Casey's profits as well as the competitor's profits will be reduced to $0 per year. If a competitor enters the Hamilton market and Casey's does not, the competitor's profits will be $100,000 per year.   
Does either player have a dominant strategy? Does the game have any Nash equilibria? What is the maximin strategy of each player in the game?

Accepted Answer

Both players can do at least as well or

Question 14

Consider the following game in which two firms decide how much of a homogeneous good to produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A's payoffs appear first in the payoff pairs:
 
What are the dominant strategies in this game?

Accepted Answer

A)  Both firms produce low levels of output 
B)  Both firms produce high levels of output 
C)  Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy. 
D)  Firm B's dominant strategy is to produce low levels of output, but Firm A does not have a dominant strategy. 
E)  Neither firm has a dominant strategy 
A)  Both firms produce low levels of output 
B)  Both firms produce high levels of output 
C)  Firm A's dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy. 
D)  Firm B's dominant strategy is to produce low levels of output, but Firm A does not have a dominant strategy. 
E)  Neither firm has a dominant strategy

Question 15

Scenario 13.6
Consider the following game. Payoffs are in millions of dollars.  
-Refer to the game in Scenario 13.6. What will occur if ERS Co. plays a maximin strategy?

Accepted Answer

A)  -$100, -$1 
B)  $2, -$0.5 
C)  $1, -$1 
D)  -$0.5, -$0.5 
E)  There is a 0.25 chance of each outcome in that case. 
A)  -$100, -$1 
B)  $2, -$0.5 
C)  $1, -$1 
D)  -$0.5, -$0.5 
E)  There is a 0.25 chance of each outcome in that case.

Question 16

Scenario 13.9
Consider the following game:
Two firms are situated next to a lake, and it costs each firm $1,500 per period to use filters that avoid polluting the lake. However, each firm must use the lake's water in production, so it is also costly to have a polluted lake. The cost to each firm of dealing with water from a polluted lake is $1,000 times the number of polluting firms.  
-Refer to Scenario 13.9. The equilibrium of this game, if played only once, is that

Accepted Answer

A)  both firms pollute. 
B)  only Lago pollutes. 
C)  only Nessie pollutes. 
D)  neither firm pollutes. 
E)  the firms choose a mixed strategy. 
A)  both firms pollute. 
B)  only Lago pollutes. 
C)  only Nessie pollutes. 
D)  neither firm pollutes. 
E)  the firms choose a mixed strategy.

Question 17

Scenario 13.10
Consider the game below:  
-The game in Scenario 13.10 is

Accepted Answer

A)  variable-sum. 
B)  constant-sum. 
C)  cooperative. 
D)  a Prisoners' Dilemma. 
E)  a Cournot Production Cross. 
A)  variable-sum. 
B)  constant-sum. 
C)  cooperative. 
D)  a Prisoners' Dilemma. 
E)  a Cournot Production Cross.

Question 18

If player R moves first in the game in Scenario 13.14, the equilibrium will

Accepted Answer

A)  not be different from what it is in the simultaneous-move scenario. 
B)  be to R's detriment because it will not be able to react to C's choice. 
C)  be one in which R chooses 50 and C chooses 150. 
D)  be one in which R chooses 100 and C chooses 50. 
E)  be one in which R chooses 150 and C chooses 50. 
A)  not be different from what it is in the simultaneous-move scenario. 
B)  be to R's detriment because it will not be able to react to C's choice. 
C)  be one in which R chooses 50 and C chooses 150. 
D)  be one in which R chooses 100 and C chooses 50. 
E)  be one in which R chooses 150 and C chooses 50.

Question 19

Scenario 13.9
Consider the following game:
Two firms are situated next to a lake, and it costs each firm $1,500 per period to use filters that avoid polluting the lake. However, each firm must use the lake's water in production, so it is also costly to have a polluted lake. The cost to each firm of dealing with water from a polluted lake is $1,000 times the number of polluting firms.  
-Refer to Scenario 13.9. What kind of game is being played by Lago and Nessie?

Accepted Answer

A)  Battle of the Sexes. 
B)  Prisoners' Dilemma. 
C)  Beach Location. 
D)  Stackelberg Output Choice. 
E)  Cournot Output Choice. 
A)  Battle of the Sexes. 
B)  Prisoners' Dilemma. 
C)  Beach Location. 
D)  Stackelberg Output Choice. 
E)  Cournot Output Choice.

Question 20

Scenario 13.16
Consider the pricing game below:  
-What is true about dominant strategies in the game in Scenario 13.16?

Accepted Answer

A)  Gelato is a dominant strategy for both firms. 
B)  Yogurt is a dominant strategy for Gooi only. 
C)  Yogurt is a dominant strategy for Ici only. 
D)  Yogurt is a dominant strategy for both firms. 
E)  There are no dominant strategies in the above game. 
A)  Gelato is a dominant strategy for both firms. 
B)  Yogurt is a dominant strategy for Gooi only. 
C)  Yogurt is a dominant strategy for Ici only. 
D)  Yogurt is a dominant strategy for both firms. 
E)  There are no dominant strategies in the above game.

A "sequential game" is

Consider the Matching Pennies game: Suppose both players use maximin strategies for this game. Is there a clear equilibrium outcome to the game in this case?

Which of the following is NOT a key component of every game?

When, in the game in Scenario 13.14, the strategy that would not be chosen under any circumstances is removed, what is left is a

Scenario 13.4 Consider the following game: -In the game in Scenario 13.4, the equilibrium outcome:

Scenario 13.1: You are negotiating with your florist over the price of flowers for your wedding. You value the floral arrangements at $500. The florist's cost for the arrangement is $200. You finally settled on a price of $250. -Refer to Scenario 13.1. Your negotiations are an example of:

Scenario 13.15 Consider the pricing game below: -Which is true about dominant strategies in the game in Scenario 13.15?

Scenario 13.14 Consider the game below: -In the game in Scenario 13.14,

Consider the following game in which two firms decide how much of a homogeneous good to produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A's payoffs appear first in the payoff pairs: What are the dominant strategies in this game?

Scenario 13.6 Consider the following game. Payoffs are in millions of dollars. -Refer to the game in Scenario 13.6. What will occur if ERS Co. plays a maximin strategy?

Scenario 13.10 Consider the game below: -The game in Scenario 13.10 is

If player R moves first in the game in Scenario 13.14, the equilibrium will

Scenario 13.16 Consider the pricing game below: -What is true about dominant strategies in the game in Scenario 13.16?

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Filters

Exam 13: Game Theory and Competitive Strategy

A "sequential game" is

Consider the Matching Pennies game: Suppose both players use maximin strategies for this game. Is there a clear equilibrium outcome to the game in this case?

Which of the following is NOT a key component of every game?

When, in the game in Scenario 13.14, the strategy that would not be chosen under any circumstances is removed, what is left is a

Scenario 13.4 Consider the following game: -In the game in Scenario 13.4, the equilibrium outcome:

Scenario 13.1: You are negotiating with your florist over the price of flowers for your wedding. You value the floral arrangements at $500. The florist's cost for the arrangement is $200. You finally settled on a price of $250. -Refer to Scenario 13.1. Your negotiations are an example of:

Scenario 13.15 Consider the pricing game below: -Which is true about dominant strategies in the game in Scenario 13.15?

Scenario 13.14 Consider the game below: -In the game in Scenario 13.14,

Consider the following game in which two firms decide how much of a homogeneous good to produce. The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A's payoffs appear first in the payoff pairs: What are the dominant strategies in this game?

Scenario 13.6 Consider the following game. Payoffs are in millions of dollars. -Refer to the game in Scenario 13.6. What will occur if ERS Co. plays a maximin strategy?

Scenario 13.10 Consider the game below: -The game in Scenario 13.10 is

If player R moves first in the game in Scenario 13.14, the equilibrium will

Scenario 13.16 Consider the pricing game below: -What is true about dominant strategies in the game in Scenario 13.16?

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Filters