Question 1

If, in the game in Scenario 13.14, R moves first, C will respond with

Accepted Answer

A)  Q = 50. 
B)  Q = 100. 
C)  Q = 150. 
D)  a mixed strategy over the three choices that includes some positive likelihood for each Q. 
E)  a mixed strategy over the choices Q = 50 and Q = 100. 
A)  Q = 50. 
B)  Q = 100. 
C)  Q = 150. 
D)  a mixed strategy over the three choices that includes some positive likelihood for each Q. 
E)  a mixed strategy over the choices Q = 50 and Q = 100.

Question 2

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 3

Scenario 13.3
Consider the following game:  
-Which of the following is true for the game in Scenario 13.3?

Accepted Answer

A)  Moto's dominant strategy is the CD changer. 
B)  Moto's dominant strategy is the free maintenance. 
C)  Zport's dominant strategy is the low-profile tires. 
D)  Zport's dominant strategy is the sun roof. 
E)  Neither company has a dominant strategy. 
A)  Moto's dominant strategy is the CD changer. 
B)  Moto's dominant strategy is the free maintenance. 
C)  Zport's dominant strategy is the low-profile tires. 
D)  Zport's dominant strategy is the sun roof. 
E)  Neither company has a dominant strategy.

Question 4

In the sequential version of a game using the same players, the same strategies, and the same possible outcomes as the original game, the equilibrium:

Accepted Answer

A)  may be different than in the original game. 
B)  must be different than in the original game. 
C)  will be the same as in the original game. 
D)  is the same as the cooperative version of the original game. 
E)  is the same as the noncooperative version of the original game. 
A)  may be different than in the original game. 
B)  must be different than in the original game. 
C)  will be the same as in the original game. 
D)  is the same as the cooperative version of the original game. 
E)  is the same as the noncooperative version of the original game.

Question 5

A strategy A is "dominant" for a player X if:

Accepted Answer

A)  strategy A contains among its outcomes the highest possible payoff in the game. 
B)  irrespective of any of the possible strategies chosen by the other players, strategy A generates a higher payoff than any other strategy available to player X. 
C)  strategy A is the best response to every strategy of the other player. 
D)  strategy A is the best response to the best strategy of the other player. 
E)  every outcome under strategy A generates positive payoffs. 
A)  strategy A contains among its outcomes the highest possible payoff in the game. 
B)  irrespective of any of the possible strategies chosen by the other players, strategy A generates a higher payoff than any other strategy available to player X. 
C)  strategy A is the best response to every strategy of the other player. 
D)  strategy A is the best response to the best strategy of the other player. 
E)  every outcome under strategy A generates positive payoffs.

Question 6

When cost and demand are stable over time in an industry, repetition of Prisoners' Dilemma situations:

Accepted Answer

A)  can yield cooperative outcomes because firms can explicitly collude to set prices. 
B)  can yield cooperative outcomes even when firms do not explicitly collude to set prices. 
C)  will tend to yield noncooperative outcomes. 
D)  will always yield noncooperative outcomes. 
E)  Cooperative or noncooperative outcomes may occur, but cooperation is harder than when the market is unstable. 
A)  can yield cooperative outcomes because firms can explicitly collude to set prices. 
B)  can yield cooperative outcomes even when firms do not explicitly collude to set prices. 
C)  will tend to yield noncooperative outcomes. 
D)  will always yield noncooperative outcomes. 
E)  Cooperative or noncooperative outcomes may occur, but cooperation is harder than when the market is unstable.

Question 7

Consider two firms, X and Y, that produce super computers. Each can produce the next generation super computer for the military (M) or for civilian research (C). However, only one can successfully produce for both markets simultaneously. Also, if one produces M, the other might not be able to successfully produce M, because of the limited market. The following payoff matrix illustrates the problem.   a. Find the Nash equilibrium, and explain why it is a Nash equilibrium.
b. If Firm X were unsure that the management of Firm Y were rational, what would Firm X choose to do if it followed a maximin strategy? What would both firms do if they both followed a maximin strategy?

Accepted Answer

a.The Nash equilibrium occurs at the bot

Question 8

Scenario 13.13
Consider the game below:  
-If the game in Scenario 13.13 were not played sequentially,

Accepted Answer

A)  the only equilibrium would be (R2,C1). 
B)  the only equilibrium would be (R1,C2). 
C)  the only equilibria would be (R2,C1) and (R1,C2). 
D)  the only equilibria would be (R2,C1), (R1,C2) and a mixed strategy equilibrium. 
E)  there would not be any equilibrium. 
A)  the only equilibrium would be (R2,C1). 
B)  the only equilibrium would be (R1,C2). 
C)  the only equilibria would be (R2,C1) and (R1,C2). 
D)  the only equilibria would be (R2,C1), (R1,C2) and a mixed strategy equilibrium. 
E)  there would not be any equilibrium.

Question 9

As defined by Thomas Schelling, a "strategic move" is:

Accepted Answer

A)  any strategy choice in a game. 
B)  any strategy choice consistent with Nash equilibrium. 
C)  any strategy choice in a sequential game. 
D)  a strategy choice that influences the subsequent strategy choice of another player. 
E)  a strategy choice that restricts the set of outcomes available to another player. 
A)  any strategy choice in a game. 
B)  any strategy choice consistent with Nash equilibrium. 
C)  any strategy choice in a sequential game. 
D)  a strategy choice that influences the subsequent strategy choice of another player. 
E)  a strategy choice that restricts the set of outcomes available to another player.

Question 10

Joe's Imports is currently the only dealer for imported Sporto autos on the East Coast, but Fred's Autos may enter the import market and start selling Sporto cars in the East Coast market during the coming year. Joe's Imports can pay the Sporto manufacturer for exclusive East Coast marketing rights, which would deter the entry of Fred's Autos into the market. The payoffs from the possible actions are measured in millions of dollars per year, and the possible outcomes of the sequential entry game are summarized in the following matrix:   What is the equilibrium outcome from this sequential entry game?

Accepted Answer

A)  Joe's Imports buys the marketing rights, and Fred's Autos cannot enter the market. 
B)  Joe's Imports buys the marketing rights, and Fred's Autos enters the market. 
C)  Joe's Imports does not buy the marketing rights, and Fred's Autos enters the market. 
D)  Joe's Imports does not buy the marketing rights, but Fred's Autos does not enter the market. 
A)  Joe's Imports buys the marketing rights, and Fred's Autos cannot enter the market. 
B)  Joe's Imports buys the marketing rights, and Fred's Autos enters the market. 
C)  Joe's Imports does not buy the marketing rights, and Fred's Autos enters the market. 
D)  Joe's Imports does not buy the marketing rights, but Fred's Autos does not enter the market.

Question 11

Joanna has a credit card account with Card Bank. Card Bank's available strategies are to raise Joanna's credit card interest rate or do nothing. Joanna's available strategies are to transfer her Card Bank account balance to another creditor or do nothing. The strategy payoffs are indicated 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

Card Bank can always do at least as well

Question 12

Scenario 13.6
Consider the following game. Payoffs are in millions of dollars.  
-In the game in Scenario 13.6, what is the Nash equilibrium?

Accepted Answer

A)  The strategy pair associated with -$100, -$1. 
B)  The strategy pair associated with $2, -$0.5. 
C)  The strategy pair associated with $1, -$1. 
D)  The strategy pair associated with -$0.5, -$0.5. 
E)  There is no Nash equilibrium in pure strategies. 
A)  The strategy pair associated with -$100, -$1. 
B)  The strategy pair associated with $2, -$0.5. 
C)  The strategy pair associated with $1, -$1. 
D)  The strategy pair associated with -$0.5, -$0.5. 
E)  There is no Nash equilibrium in pure strategies.

Question 13

Gym X and Bodyworks are both going to open an exercise facility in the local market. Each company may decide to open a facility concentrating on cardio equipment for customers interested in mostly aerobic workouts. Another alternative for each company is to open a facility concentrating on muscle building equipment for customers interested mostly in bodybuilding workouts. The payoff matrix for each company dependent upon their strategies and that of their competitor is given 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 14

The widget market is controlled by two firms: Acme Widget Company and Widgetway Manufacturing. The structure of the market makes secret price cutting impossible. Each firm announces a price at the beginning of the time period and sells widgets at the price for the duration of the period. There is very little brand loyalty among widget buyers so that each firm's demand is highly elastic. Each firm's prices are thus very sensitive to inter-firm price differentials. The two firms must choose between a high and low price strategy for the coming period. Profits (measured in thousands of dollars) for the two firms under each price strategy are given in the payoff matrix below. Widgetway's profit is before the comma, Acme's is after the comma.   a. Does either firm have a dominant strategy? What strategy should each firm follow?
b. Assume that the game is to be played an infinite number of times. (Or, equivalently, imagine that neither firm knows for certain when rounds of the game will end, so there is always a positive chance that another round is to be played after the present one.) Would the tit-for-tat strategy would be a reasonable choice? Explain this strategy.
c. Assume that the game is to be played a very large (but finite) number of times. What is the appropriate strategy if both firms are always rational?

Accepted Answer

a.Each firm's dominant strategy is the l

Question 15

It can be rational to play tit-for-tat in a repeated Prisoners' Dilemma game:

Accepted Answer

A)  only if the game is played an infinite number of times. 
B)  if the game is played an infinite number of times, or if it is uncertain how many times it will be played. 
C)  only if the game is played a finite number of times, and that number is known by all the players in advance. 
D)  for n-1 of the n periods it will be played, if n is known in advance. 
E)  at no time; tit-for-tat is an irrational strategy in this situation. 
A)  only if the game is played an infinite number of times. 
B)  if the game is played an infinite number of times, or if it is uncertain how many times it will be played. 
C)  only if the game is played a finite number of times, and that number is known by all the players in advance. 
D)  for n-1 of the n periods it will be played, if n is known in advance. 
E)  at no time; tit-for-tat is an irrational strategy in this situation.

Question 16

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 17

Tony and Larry are managers of baseball teams that currently playing a game. It's late in the ballgame and Tony's team is currently winning and in the field. Tony's strategies are to bring in a right handed pitcher (RHP) or to bring in a left handed pitcher (LHP). Larry's strategies are to bring in a right handed pinch hitter (RPH) or to bring in a left handed pinch hitter (LPH). The payoff matrix is in terms of winning (W) or losing (L) the game. Does either player have a dominant strategy? Does the game have a Nash equilibrium? What is the maximin strategy of each player in the game?

Accepted Answer

Neither player has a dominant

Question 18

Use the following statements to answer this question: I. If mixed strategies are allowed, every game has at least one Nash equilibrium.
II) The maximin strategy is optimal in the game of "matching pennies."

Accepted Answer

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

Question 19

Scenario 13.17
Consider the entry-deterrence game below. The potential entrant would have to spend some amount in sunk costs to enter the market.  
-In the game in Scenario 13.17, Incumbent Monopoly has:

Accepted Answer

A)  an incentive to threaten accommodation, which would be credible. 
B)  an incentive to threaten war, which would be credible. 
C)  an incentive to threaten accommodation, which wouldn't be credible. 
D)  an incentive to threaten war, which wouldn't be credible. 
E)  no incentive to make a threat. 
A)  an incentive to threaten accommodation, which would be credible. 
B)  an incentive to threaten war, which would be credible. 
C)  an incentive to threaten accommodation, which wouldn't be credible. 
D)  an incentive to threaten war, which wouldn't be credible. 
E)  no incentive to make a threat.

Question 20

If Simple were able to move first in a sequential version of the game in Scenario 13.15, the equilibrium would be:

Accepted Answer

A)  an $80 price for Simple and a $70 price for Boring. 
B)  an $80 price for Simple and a $25 price for Boring. 
C)  a $35 price for Simple and a $70 price for Boring. 
D)  a $35 price for Simple and a $25 price for Boring. 
E)  a mixed strategy equilibrium. 
A)  an $80 price for Simple and a $70 price for Boring. 
B)  an $80 price for Simple and a $25 price for Boring. 
C)  a $35 price for Simple and a $70 price for Boring. 
D)  a $35 price for Simple and a $25 price for Boring. 
E)  a mixed strategy equilibrium.

If, in the game in Scenario 13.14, R moves first, C will respond with

Scenario 13.3 Consider the following game: -Which of the following is true for the game in Scenario 13.3?

In the sequential version of a game using the same players, the same strategies, and the same possible outcomes as the original game, the equilibrium:

A strategy A is "dominant" for a player X if:

When cost and demand are stable over time in an industry, repetition of Prisoners' Dilemma situations:

Scenario 13.13 Consider the game below: -If the game in Scenario 13.13 were not played sequentially,

As defined by Thomas Schelling, a "strategic move" is:

Scenario 13.6 Consider the following game. Payoffs are in millions of dollars. -In the game in Scenario 13.6, what is the Nash equilibrium?

It can be rational to play tit-for-tat in a repeated Prisoners' Dilemma game:

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?

Use the following statements to answer this question: I. If mixed strategies are allowed, every game has at least one Nash equilibrium. II) The maximin strategy is optimal in the game of "matching pennies."

Scenario 13.17 Consider the entry-deterrence game below. The potential entrant would have to spend some amount in sunk costs to enter the market. -In the game in Scenario 13.17, Incumbent Monopoly has:

If Simple were able to move first in a sequential version of the game in Scenario 13.15, the equilibrium would be:

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, in the game in Scenario 13.14, R moves first, C will respond with

Scenario 13.3 Consider the following game: -Which of the following is true for the game in Scenario 13.3?

In the sequential version of a game using the same players, the same strategies, and the same possible outcomes as the original game, the equilibrium:

A strategy A is "dominant" for a player X if:

When cost and demand are stable over time in an industry, repetition of Prisoners' Dilemma situations:

Scenario 13.13 Consider the game below: -If the game in Scenario 13.13 were not played sequentially,

As defined by Thomas Schelling, a "strategic move" is:

Scenario 13.6 Consider the following game. Payoffs are in millions of dollars. -In the game in Scenario 13.6, what is the Nash equilibrium?

It can be rational to play tit-for-tat in a repeated Prisoners' Dilemma game:

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?

Use the following statements to answer this question: I. If mixed strategies are allowed, every game has at least one Nash equilibrium. II) The maximin strategy is optimal in the game of "matching pennies."

Scenario 13.17 Consider the entry-deterrence game below. The potential entrant would have to spend some amount in sunk costs to enter the market. -In the game in Scenario 13.17, Incumbent Monopoly has:

If Simple were able to move first in a sequential version of the game in Scenario 13.15, the equilibrium would be:

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