Question 1

Relative to a simultaneous-move situation,the loss to firm C from having to move second in the game in Scenario 13.14,would be

Accepted Answer

A) 37. 
B) 20. 
C) 12. 
D) 8) 
E) 5) 
A) 37. 
B) 20. 
C) 12. 
D) 8) 
E) 5)

Question 2

The two largest auto manufacturers,Toyota and GM,have experimented with electric cars in the past,and they are currently considering the decision to introduce an electric car into the commercial automobile market.The payoffs from the possible actions are measured in millions of dollars per year,and the possible outcomes are summarized in the following game matrix:   Suppose the Japanese government provides a $15 million subsidy to Toyota if the company delivers an electric auto (regardless of GM's action).What is the Nash equilibrium based on the subsidized payoffs?

Accepted Answer

A) Toyota's dominant strategy is to produce,and GM is deterred and does not produce. 
B) Toyota's dominant strategy is to produce,and GM also produces the electric auto. 
C) The outcome of the game is the same as before,and there are two Nash equilibria - GM produces and Toyota does not produce,or Toyota produces and GM does not produce. 
D) There is no Nash equilibrium in this game. 
A) Toyota's dominant strategy is to produce,and GM is deterred and does not produce. 
B) Toyota's dominant strategy is to produce,and GM also produces the electric auto. 
C) The outcome of the game is the same as before,and there are two Nash equilibria - GM produces and Toyota does not produce,or Toyota produces and GM does not produce. 
D) There is no Nash equilibrium in this game.

Question 3

Scenario 13.15
Consider the pricing game below:  
-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.

Question 4

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.If this game is repeated over an infinite or uncertain horizon,the most likely observed behavior will be that

Accepted Answer

A) both firms pollute. 
B) only Lago pollutes. 
C) only Nessie pollutes. 
D) neither firm pollutes. 
E) the firms alternate polluting in different periods. 
A) both firms pollute. 
B) only Lago pollutes. 
C) only Nessie pollutes. 
D) neither firm pollutes. 
E) the firms alternate polluting in different periods.

Question 5

Scenario 13.3
Consider the following game:  
-In the game in Scenario 13.3,the equilibrium outcome:

Accepted Answer

A) is for Moto to offer a CD changer and Zport to offer low-profile tires. 
B) is for Moto to offer a CD changer and Zport to offer a sun roof. 
C) is for Moto to offer free maintenance and Zport to offer low-profile tires. 
D) is for Moto to offer free maintenance and Zport to offer a sunroof. 
E) does not exist in pure strategies. 
A) is for Moto to offer a CD changer and Zport to offer low-profile tires. 
B) is for Moto to offer a CD changer and Zport to offer a sun roof. 
C) is for Moto to offer free maintenance and Zport to offer low-profile tires. 
D) is for Moto to offer free maintenance and Zport to offer a sunroof. 
E) does not exist in pure strategies.

Question 6

Scenario 13.14
Consider the game below:  
-The game in Scenario 13.14

Accepted Answer

A) is Stackelberg if both players move at the same time; Cournot if one player moves first. 
B) is Cournot if both players move at the same time; Stackelberg if one player moves first. 
C) Stackelberg no matter what the timing of moves. 
D) Cournot no matter what the timing of moves. 
E) is neither Stackelberg nor Cournot. 
A) is Stackelberg if both players move at the same time; Cournot if one player moves first. 
B) is Cournot if both players move at the same time; Stackelberg if one player moves first. 
C) Stackelberg no matter what the timing of moves. 
D) Cournot no matter what the timing of moves. 
E) is neither Stackelberg nor Cournot.

Question 7

A "Credible Threat"

Accepted Answer

A) is also called a "tit-for-tat" strategy. 
B) always set a low price. 
C) minimizes the return of your opponent. 
D) is a strategy selection that is in your best interest. 
E) provides the best return for both players. 
A) is also called a "tit-for-tat" strategy. 
B) always set a low price. 
C) minimizes the return of your opponent. 
D) is a strategy selection that is in your best interest. 
E) provides the best return for both players.

Question 8

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 op

Question 9

Scenario 13.2:  
-Which of the following is true about the game in Scenario 13.2?

Accepted Answer

A) ABC's dominant strategy is to offer a rebate. 
B) ABC's dominant strategy is not offer a rebate. 
C) XYZ's dominant strategy is to offer a rebate. 
D) XYZ's dominant strategy is not offer a rebate. 
E) Both ABC and XYZ have offer a rebate as a dominant strategy. 
A) ABC's dominant strategy is to offer a rebate. 
B) ABC's dominant strategy is not offer a rebate. 
C) XYZ's dominant strategy is to offer a rebate. 
D) XYZ's dominant strategy is not offer a rebate. 
E) Both ABC and XYZ have offer a rebate as a dominant strategy.

Question 10

Scenario 13.16
Consider the pricing game below:  
-To deter a potential entrant,an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market.This may be a credible threat if:

Accepted Answer

A) production exhibits economies of scale. 
B) production exhibits diseconomies of scale. 
C) production costs may fall due to learning-by-doing. 
D) A and C are correct. 
E) B and C are correct. 
A) production exhibits economies of scale. 
B) production exhibits diseconomies of scale. 
C) production costs may fall due to learning-by-doing. 
D) A and C are correct. 
E) B and C are correct.

Question 11

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 pay-offs are presented in the pay-off 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 12

What does it mean to say that a game is in "extensive form"?

Accepted Answer

A) Strategies are described,rather than just numbered. 
B) All payoffs are shown. 
C) The game is presented as a matrix. 
D) The game is presented as a decision tree. 
E) The game is written out as often as the situation calls for it to be played. 
A) Strategies are described,rather than just numbered. 
B) All payoffs are shown. 
C) The game is presented as a matrix. 
D) The game is presented as a decision tree. 
E) The game is written out as often as the situation calls for it to be played.

Question 13

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.  
-In the game in Scenario 13.7,the strategy pair that pays

Accepted Answer

A) $69,000 to each player is the only equilibrium. 
B) ($0,-$1000)is the only equilibrium. 
C) (-$1000,$0)is the only equilibrium. 
D) $0 to each player is the only equilibrium. 
E) $69,000 to each player and the strategy pair that pays $0 to each player are equilibria. 
A) $69,000 to each player is the only equilibrium. 
B) ($0,-$1000)is the only equilibrium. 
C) (-$1000,$0)is the only equilibrium. 
D) $0 to each player is the only equilibrium. 
E) $69,000 to each player and the strategy pair that pays $0 to each player are equilibria.

Question 14

In the game in Scenario 13.10,there is

Accepted Answer

A) a mixed strategy equilibrium,and no other. 
B) a mixed strategy and a pure strategy equilibrium. 
C) a mixed strategy and two pure strategy equilibria. 
D) a mixed strategy and four pure strategy equilibrium. 
E) no equilibrium in either mixed or pure strategies. 
A) a mixed strategy equilibrium,and no other. 
B) a mixed strategy and a pure strategy equilibrium. 
C) a mixed strategy and two pure strategy equilibria. 
D) a mixed strategy and four pure strategy equilibrium. 
E) no equilibrium in either mixed or pure strategies.

Question 15

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 16

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 17

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 18

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 19

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.

Question 20

Scenario 13.12
Consider the game below:  
-Playing the game in Scenario 13.12 by using a maximin strategy would

Accepted Answer

A) not change the equilibrium from the equilibrium of the original game. 
B) change the equilibrium to (R1,C2). 
C) change the equilibrium to (R2,C1)if R moved first. 
D) change the equilibrium to (R2,C1)if C moved first. 
E) change the equilibrium to (R2,C2). 
A) not change the equilibrium from the equilibrium of the original game. 
B) change the equilibrium to (R1,C2). 
C) change the equilibrium to (R2,C1)if R moved first. 
D) change the equilibrium to (R2,C1)if C moved first. 
E) change the equilibrium to (R2,C2).

Relative to a simultaneous-move situation,the loss to firm C from having to move second in the game in Scenario 13.14,would be

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

Scenario 13.3 Consider the following game: -In the game in Scenario 13.3,the equilibrium outcome:

Scenario 13.14 Consider the game below: -The game in Scenario 13.14

A "Credible Threat"

Scenario 13.2: -Which of the following is true about the game in Scenario 13.2?

Scenario 13.16 Consider the pricing game below: -To deter a potential entrant,an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market.This may be a credible threat if:

What does it mean to say that a game is in "extensive form"?

In the game in Scenario 13.10,there is

A "sequential game" is

A dominant strategy can best be described as

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

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

Scenario 13.12 Consider the game below: -Playing the game in Scenario 13.12 by using a maximin strategy would

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 1-83

Markets With Asymmetric Information

Externalities and Public Goods

Filters

Exam 13: Game Theory and Competitive Strategy

Relative to a simultaneous-move situation,the loss to firm C from having to move second in the game in Scenario 13.14,would be

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

Scenario 13.3 Consider the following game: -In the game in Scenario 13.3,the equilibrium outcome:

Scenario 13.14 Consider the game below: -The game in Scenario 13.14

A "Credible Threat"

Scenario 13.2: -Which of the following is true about the game in Scenario 13.2?

Scenario 13.16 Consider the pricing game below: -To deter a potential entrant,an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market.This may be a credible threat if:

What does it mean to say that a game is in "extensive form"?

In the game in Scenario 13.10,there is

A "sequential game" is

A dominant strategy can best be described as

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

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

Scenario 13.12 Consider the game below: -Playing the game in Scenario 13.12 by using a maximin strategy would

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 1-83

Markets With Asymmetric Information

Externalities and Public Goods

Filters