Question 1

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 2

A dominant strategy can best be described as:

Accepted Answer

A)  a strategy taken by a dominant firm. 
B)  the strategy taken by a firm in order to dominate its rivals. 
C)  a strategy that is optimal for a player no matter what an opponent does. 
D)  a strategy that leaves every player in a game better off. 
E)  all of the above 
A)  a strategy taken by a dominant firm. 
B)  the strategy taken by a firm in order to dominate its rivals. 
C)  a strategy that is optimal for a player no matter what an opponent does. 
D)  a strategy that leaves every player in a game better off. 
E)  all of the above

Question 3

Use the following statements to answer this question: I. A player must have at least one dominant strategy in a game.
II) If neither player in a game has a dominant strategy in a game, then there is no equilibrium outcome for the game.

Accepted Answer

A)  I and II are true. 
B)  I is true and II is false. 
C)  II is true and I is false. 
D)  I and II are false. 
A)  I and II are true. 
B)  I is true and II is false. 
C)  II is true and I is false. 
D)  I and II are false.

Question 4

Scenario 13.4
Consider the following game:  
-Which of the following is TRUE for the game in Scenario 13.4?

Accepted Answer

A)  NRG's dominant strategy is to sponsor the marathon. 
B)  NRG's dominant strategy is to sponsor the TV show. 
C)  Vita's dominant strategy is to sponsor the marathon. 
D)  Vita's dominant strategy is to sponsor the TV show. 
E)  Neither company has a dominant strategy. 
A)  NRG's dominant strategy is to sponsor the marathon. 
B)  NRG's dominant strategy is to sponsor the TV show. 
C)  Vita's dominant strategy is to sponsor the marathon. 
D)  Vita's dominant strategy is to sponsor the TV show. 
E)  Neither company has a dominant strategy.

Question 5

If both players in a game have dominant strategies, we say that the game has:

Accepted Answer

A)  a constant sum. 
B)  a nonconstant sum. 
C)  independence of irrelevant alternatives. 
D)  an equilibrium in dominant strategies. 
A)  a constant sum. 
B)  a nonconstant sum. 
C)  independence of irrelevant alternatives. 
D)  an equilibrium in dominant strategies.

Question 6

A small regional airline is considering offering service to the Big City market. A large carrier already provides service to Big City. The small carrier's two strategies are: Enter Market or Do Not Enter. The large carrier's strategies are: Price Dump or Maximize Profits in the Short Run. By price dumping in the Big City market, the large carrier can force the small carrier out of business and make monopoly profits in the long-run. The long-run payoffs are presented in the payoff matrix below.   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

Neither player has a dominant strategy i

Question 7

Scenario 13.13
Consider the game below:  
-Which is true of output-choice models of oligopoly behavior?

Accepted Answer

A)  Both the Stackelberg and Cournot models can be constructed as sequential games. 
B)  The Stackelberg, but not the Cournot, model can be constructed as a sequential game. 
C)  The Cournot, but not the Stackelberg, model can be constructed as a sequential game. 
D)  Neither the Cournot nor the Stackelberg model can be constructed as a sequential game, but other output-choice models can be. 
E)  There is no relationship between any output-choice model and sequential games. 
A)  Both the Stackelberg and Cournot models can be constructed as sequential games. 
B)  The Stackelberg, but not the Cournot, model can be constructed as a sequential game. 
C)  The Cournot, but not the Stackelberg, model can be constructed as a sequential game. 
D)  Neither the Cournot nor the Stackelberg model can be constructed as a sequential game, but other output-choice models can be. 
E)  There is no relationship between any output-choice model and sequential games.

Question 8

Which of the following are examples of cooperative games?

Accepted Answer

A)  The bargaining between a buyer and seller over the price of a car 
B)  Independent action by two firms in a market regarding advertising strategies 
C)  Independent pricing strategies by two firms in a market 
D)  Independent pricing strategies by many firms in a market 
E)  Team games (such as baseball or basketball) 
A)  The bargaining between a buyer and seller over the price of a car 
B)  Independent action by two firms in a market regarding advertising strategies 
C)  Independent pricing strategies by two firms in a market 
D)  Independent pricing strategies by many firms in a market 
E)  Team games (such as baseball or basketball)

Question 9

Which of the following statements is NOT true?

Accepted Answer

A)  Collusion at an auction is not possible because the bidders cannot communicate. 
B)  The expected revenue generated by an open auction will tend to increase as you provide more information to the bidders about the other bids. 
C)  The expected revenue generated by a private-value auction increases with the number of bidders. 
D)  The winner's curse is more likely to arise in sealed-bid auctions than in English auctions. 
A)  Collusion at an auction is not possible because the bidders cannot communicate. 
B)  The expected revenue generated by an open auction will tend to increase as you provide more information to the bidders about the other bids. 
C)  The expected revenue generated by a private-value auction increases with the number of bidders. 
D)  The winner's curse is more likely to arise in sealed-bid auctions than in English auctions.

Question 10

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 11

BuyRight is a chain of grocery stores operating in small cities throughout the southwestern United States. BuyRight's major competition comes from another chain, Acme Food Stores. Both firms are currently contemplating their advertising strategy for the region. The possible outcomes are illustrated by the payoff matrix below.   Entries in the payoff matrix are profits. BuyRight's profit is before the comma, Acme's is after the comma.
a. Describe what is meant by a dominant strategy.
b. Given the payoff matrix above, does each firm have a dominant strategy?
c. Under what circumstances would there be no dominant strategy for one or both firms?

Accepted Answer

a.A dominant strategy is one that is opt

Question 12

An auction in which a seller begins by offering an item for sale at a relatively high price and then reduces the price by fixed amounts until receiving a bid is known as a:

Accepted Answer

A)  Dutch auction. 
B)  English auction. 
C)  second-price auction. 
D)  sealed-bid auction. 
A)  Dutch auction. 
B)  English auction. 
C)  second-price auction. 
D)  sealed-bid auction.

Question 13

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 hi

Question 14

Wal-Mart was one of the most successful firms of the 1970s and 1980s. Much of Wal-Mart's success can be credited to its expansion strategy: they rushed to open the first discount store in small towns that could only support one discount store. In the language of game theory:

Accepted Answer

A)  Wal-Mart was a dominant firm. 
B)  Wal-Mart made empty threats. 
C)  Wal-Mart employed a maximin strategy. 
D)  Wal-Mart employed a preemptive strategy. 
A)  Wal-Mart was a dominant firm. 
B)  Wal-Mart made empty threats. 
C)  Wal-Mart employed a maximin strategy. 
D)  Wal-Mart employed a preemptive strategy.

Question 15

Which of the following statements represents a key point about strategic decision making?

Accepted Answer

A)  Strategy is less important in nonconstant sum games than in constant sum games. 
B)  The payoffs in cooperative games will always be higher than in noncooperative games. 
C)  It is essential to understand your opponent's point of view and to deduce his or her likely responses to your actions. 
D)  Optimal strategies in cooperative games always lead to economically efficient outcomes. 
A)  Strategy is less important in nonconstant sum games than in constant sum games. 
B)  The payoffs in cooperative games will always be higher than in noncooperative games. 
C)  It is essential to understand your opponent's point of view and to deduce his or her likely responses to your actions. 
D)  Optimal strategies in cooperative games always lead to economically efficient outcomes.

Question 16

There are two independent dealers for Sporto automobiles in a large city. The dealers decide to run a cooperative advertising campaign in which both dealers are listed in local newspapers ads, and they can purchase larger ads that are more likely to attract attention and generate more auto sales if the dealers commit more funds to the joint advertising budget. Is this an example of a cooperative constant-sum game?

Accepted Answer

A)  Yes, each firm can contribute zero to 100 percent of the advertising budget, so this is a constant-sum game. 
B)  Yes, all negotiated outcomes between two firms are cooperative and constant-sum situations. 
C)  No, the outcome of the advertising campaign depends on how much money the firms contribute to the campaign, so it is not constant sum. 
D)  No, the firms are independent, so their interaction cannot be cooperative. 
A)  Yes, each firm can contribute zero to 100 percent of the advertising budget, so this is a constant-sum game. 
B)  Yes, all negotiated outcomes between two firms are cooperative and constant-sum situations. 
C)  No, the outcome of the advertising campaign depends on how much money the firms contribute to the campaign, so it is not constant sum. 
D)  No, the firms are independent, so their interaction cannot be cooperative.

Question 17

A Nash equilibrium occurs when:

Accepted Answer

A)  each firm is doing the best it can, given its opponents' actions. 
B)  each firm chooses the strategy that maximizes its minimum gain. 
C)  a player can choose a strategy that is optimal regardless of its rivals' actions. 
D)  there is no dominant firm in a market. 
A)  each firm is doing the best it can, given its opponents' actions. 
B)  each firm chooses the strategy that maximizes its minimum gain. 
C)  a player can choose a strategy that is optimal regardless of its rivals' actions. 
D)  there is no dominant firm in a market.

Question 18

Use the following statements to answer this question: I. The expected revenue generated by first-price and second-price sealed-bid auctions is the same.
II) The winner's curse implies that the buyer of an auctioned item will likely be the person who made the largest positive error in their estimated value of the item.

Accepted Answer

A)  I and II are true. 
B)  I is true and II is false. 
C)  II is true and I is false. 
D)  I and II are false. 
A)  I and II are true. 
B)  I is true and II is false. 
C)  II is true and I is false. 
D)  I and II are false.

Question 19

Scenario 13.16
Consider the pricing game below:  
-Refer to Scenario 13.16. If Gooi can move first, and Ici threatens to buy yogurt machines, no matter what Gooi does,

Accepted Answer

A)  Gooi will have to buy gelato machines, so Ici will get its highest possible profit. 
B)  Gooi will buy yogurt machines, which it otherwise wouldn't have, in order to retaliate. 
C)  the equilibrium payoff of ($50,$50) will be enforced. 
D)  Gooi will not change its behavior, because Ici's threat is not credible. 
E)  Gooi will threaten to buy yogurt machines, no matter what Ici does, to see whether that will get the people at Ici to change their minds. 
A)  Gooi will have to buy gelato machines, so Ici will get its highest possible profit. 
B)  Gooi will buy yogurt machines, which it otherwise wouldn't have, in order to retaliate. 
C)  the equilibrium payoff of ($50,$50) will be enforced. 
D)  Gooi will not change its behavior, because Ici's threat is not credible. 
E)  Gooi will threaten to buy yogurt machines, no matter what Ici does, to see whether that will get the people at Ici to change their minds.

Question 20

The strategy that worked best in Axelrod's experiments using the Prisoners' Dilemma game was to:

Accepted Answer

A)  play the "cooperate" ("don't confess") strategy. 
B)  play the "defect" ("confess") strategy. 
C)  alternate between "cooperate" and "defect" strategies. 
D)  play the "cooperate" strategy at first, and from then on do whatever the other player did in the previous round, cooperating if the other player did, and defecting if the other player did. 
E)  play the "cooperate" strategy in the first round, and from then on cooperate so long as the other player does, but if the other player defects, then play the "defect" strategy from that time forward. 
A)  play the "cooperate" ("don't confess") strategy. 
B)  play the "defect" ("confess") strategy. 
C)  alternate between "cooperate" and "defect" strategies. 
D)  play the "cooperate" strategy at first, and from then on do whatever the other player did in the previous round, cooperating if the other player did, and defecting if the other player did. 
E)  play the "cooperate" strategy in the first round, and from then on cooperate so long as the other player does, but if the other player defects, then play the "defect" strategy from that time forward.

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

A dominant strategy can best be described as:

Use the following statements to answer this question: I. A player must have at least one dominant strategy in a game. II) If neither player in a game has a dominant strategy in a game, then there is no equilibrium outcome for the game.

Scenario 13.4 Consider the following game: -Which of the following is TRUE for the game in Scenario 13.4?

If both players in a game have dominant strategies, we say that the game has:

Scenario 13.13 Consider the game below: -Which is true of output-choice models of oligopoly behavior?

Which of the following are examples of cooperative games?

Which of the following statements is NOT true?

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

An auction in which a seller begins by offering an item for sale at a relatively high price and then reduces the price by fixed amounts until receiving a bid is known as a:

Wal-Mart was one of the most successful firms of the 1970s and 1980s. Much of Wal-Mart's success can be credited to its expansion strategy: they rushed to open the first discount store in small towns that could only support one discount store. In the language of game theory:

Which of the following statements represents a key point about strategic decision making?

A Nash equilibrium occurs when:

Scenario 13.16 Consider the pricing game below: -Refer to Scenario 13.16. If Gooi can move first, and Ici threatens to buy yogurt machines, no matter what Gooi does,

The strategy that worked best in Axelrod's experiments using the Prisoners' Dilemma game was to:

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

Behavioral Economics

Filters

Exam 13: Game Theory and Competitive Strategy

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

A dominant strategy can best be described as:

Use the following statements to answer this question: I. A player must have at least one dominant strategy in a game. II) If neither player in a game has a dominant strategy in a game, then there is no equilibrium outcome for the game.

Scenario 13.4 Consider the following game: -Which of the following is TRUE for the game in Scenario 13.4?

If both players in a game have dominant strategies, we say that the game has:

Scenario 13.13 Consider the game below: -Which is true of output-choice models of oligopoly behavior?

Which of the following are examples of cooperative games?

Which of the following statements is NOT true?

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

An auction in which a seller begins by offering an item for sale at a relatively high price and then reduces the price by fixed amounts until receiving a bid is known as a:

Wal-Mart was one of the most successful firms of the 1970s and 1980s. Much of Wal-Mart's success can be credited to its expansion strategy: they rushed to open the first discount store in small towns that could only support one discount store. In the language of game theory:

Which of the following statements represents a key point about strategic decision making?

A Nash equilibrium occurs when:

Scenario 13.16 Consider the pricing game below: -Refer to Scenario 13.16. If Gooi can move first, and Ici threatens to buy yogurt machines, no matter what Gooi does,

The strategy that worked best in Axelrod's experiments using the Prisoners' Dilemma game was to:

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

Behavioral Economics

Filters