Question 1

Scenario 13.16
Consider the pricing game below:  
-Refer to Scenario 13.16.If Gooi can move first,and Ici wants to realize the ($150,$300)payoff,

Accepted Answer

A) all it has to do is threaten to buy yogurt machines,no matter what Gooi does. 
B) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $50. 
C) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $150. 
D) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $300. 
E) it has to move before Gooi; there is no other way. 
A) all it has to do is threaten to buy yogurt machines,no matter what Gooi does. 
B) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $50. 
C) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $150. 
D) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $300. 
E) it has to move before Gooi; there is no other way.

Question 2

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 3

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 4

Scenario 13.2:  
-In the game in Scenario 13.2,the equilibrium strategies

Accepted Answer

A) are for both firms to offer rebates. 
B) is for ABC to offer a rebate,and XYZ not to offer a rebate. 
C) is for XYZ to offer a rebate,and ABC not to offer a rebate. 
D) are for both firms to offer no rebate. 
E) does not exist in pure strategies. 
A) are for both firms to offer rebates. 
B) is for ABC to offer a rebate,and XYZ not to offer a rebate. 
C) is for XYZ to offer a rebate,and ABC not to offer a rebate. 
D) are for both firms to offer no rebate. 
E) does not exist in pure strategies.

Question 5

Scenario 13.6
Consider the following game: Payoffs are in millions of dollars.  
-In the game in Scenario 13.6,

Accepted Answer

A) "Poison Pill" is a dominant strategy for Lawrence LLP. 
B) "Dump" is a dominant strategy for Lawrence LLP. 
C) "TurboTech" is a dominant strategy for ERS Co. 
D) "ZamboniTech" is a dominant strategy for ERS Co. 
E) No firm has a dominant strategy. 
A) "Poison Pill" is a dominant strategy for Lawrence LLP. 
B) "Dump" is a dominant strategy for Lawrence LLP. 
C) "TurboTech" is a dominant strategy for ERS Co. 
D) "ZamboniTech" is a dominant strategy for ERS Co. 
E) No firm has a dominant strategy.

Question 6

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 7

Scenario 13.11
Consider the game below:  
-What kind of game is shown in Scenario 13.11?

Accepted Answer

A) Axelrod's Paradox 
B) Stackelberg Match 
C) Prisoners' Dilemma 
D) Cournot's Duopoly Game 
E) It is not possible to tell what kind of game it is because the strategies have not been identified. 
A) Axelrod's Paradox 
B) Stackelberg Match 
C) Prisoners' Dilemma 
D) Cournot's Duopoly Game 
E) It is not possible to tell what kind of game it is because the strategies have not been identified.

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

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

Question 10

Scenario 13.8
Consider the following game:  
-In game in Scenario 13.8,what is the Nash equilibrium?

Accepted Answer

A) The strategy pair associated with $1,$10. 
B) The strategy pair associated with $2,$0. 
C) The strategy pair associated with $1,-$5000. 
D) The strategy pair associated with $2,$2. 
E) There is no Nash equilibrium in pure strategies. 
A) The strategy pair associated with $1,$10. 
B) The strategy pair associated with $2,$0. 
C) The strategy pair associated with $1,-$5000. 
D) The strategy pair associated with $2,$2. 
E) There is no Nash equilibrium in pure strategies.

Scenario 13.16 Consider the pricing game below: -Refer to Scenario 13.16.If Gooi can move first,and Ici wants to realize the ($150,$300)payoff,

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

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

Scenario 13.2: -In the game in Scenario 13.2,the equilibrium strategies

Scenario 13.6 Consider the following game: Payoffs are in millions of dollars. -In the game in Scenario 13.6,

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

Scenario 13.11 Consider the game below: -What kind of game is shown in Scenario 13.11?

Scenario 13.8 Consider the following game: -In game in Scenario 13.8,what is the Nash equilibrium?

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

Scenario 13.16 Consider the pricing game below: -Refer to Scenario 13.16.If Gooi can move first,and Ici wants to realize the ($150,$300)payoff,

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

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

Scenario 13.2: -In the game in Scenario 13.2,the equilibrium strategies

Scenario 13.6 Consider the following game: Payoffs are in millions of dollars. -In the game in Scenario 13.6,

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

Scenario 13.11 Consider the game below: -What kind of game is shown in Scenario 13.11?

Scenario 13.8 Consider the following game: -In game in Scenario 13.8,what is the Nash equilibrium?

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