Question 1

Search costs are the economic costs incurred by individuals and/or firms associated with analyzing and making a decision to engage in a transaction.

Accepted Answer

A) True 
 B)False  True

Question 2

Extensive form game is a game that is characterized by sequences of decisions and will only have one Nash equilibrium.

Accepted Answer

A) True 
 B)False  False

Question 3

Nash equilibrium is a game outcome in which each player obtains the best possible result given the strategy of the player's rivals).

Accepted Answer

A) True 
 B)False  True

Question 4

The following table is for two towel companies. They each offer cotton towels that are highly absorbent and fluffy even though they are made from different cottons. Since every household uses towels, these firms believe that there will always be a tomorrow for their product. Both Tom and Cathy have agreed to charge high prices in order to make a more than normal profit.   Which of the following is true?

Accepted Answer

A)  in the long run, it is in Cathy's Cotton's best interest to defect from their agreement and charge a lower price. 
B)  in the long run, it is in Tom's Terrycloth's best interest to defect from their agreement and charge a lower price. 
C)  there is no incentive for either firm to defect from the agreement 
D)  the agreement is only rational as long as the interest rate is sufficiently low to make the gains from defecting less than the present value of the of the profit obtained from colluding. 
E)  none of the above 
A)  in the long run, it is in Cathy's Cotton's best interest to defect from their agreement and charge a lower price. 
B)  in the long run, it is in Tom's Terrycloth's best interest to defect from their agreement and charge a lower price. 
C)  there is no incentive for either firm to defect from the agreement 
D)  the agreement is only rational as long as the interest rate is sufficiently low to make the gains from defecting less than the present value of the of the profit obtained from colluding. 
E)  none of the above

Question 5

Franie's Futons currently sells 55 futons a month at $450.00 for a total of $24,750 each month. Franie wants to increase the sales volume and has decided the best way to do that is to offer incentives. An employee will have the following bonus schedule and has also placed a monetary value on their marginal effort.  
How many futons will this employee sell?

Accepted Answer

A)  65 
B)  75 
C)  85 
D)  95 
E)  105 
A)  65 
B)  75 
C)  85 
D)  95 
E)  105

Question 6

Frank's Futons currently sells 55 futons a month at $450.00 for a total of $24,750 each month. Frank wants to increase the sales volume and has decided to offer incentives. An employee will have the following bonus schedule and has also placed a monetary value on their marginal effort. This employee will sell 85 futons for a bonus of $150.00 dollars.

Accepted Answer

A) True 
 B)False

Question 7

A strategy is a choice or a sequence of choices made by a decision maker who has incurred the opportunity cost of that choice which may change based on how rivals react to that choice.

Accepted Answer

A) True 
 B)False

Question 8

A term applied to a situation wherein the parties involved in a transaction have non-identical information that may affect the outcome of that transaction is:

Accepted Answer

A)  search costs 
B)  adverse selection 
C)  asymmetric information 
D)  marginal costs 
E)  transaction information 
A)  search costs 
B)  adverse selection 
C)  asymmetric information 
D)  marginal costs 
E)  transaction information

Question 9

The following game tree is for two video rental companies Michael's Movies and Frank's Flicks) that are trying to determine if they should open stores in a college town.
 
What is the optimal strategy for Michael's Movies?

Accepted Answer

A)  Michael's Movies should charge high prices when Frank's Flicks charges high prices. 
B)  Michael's Movies should charge high prices when Frank's Flicks charges low prices. 
C)  Michael's Movies should charge low prices when Frank's Flicks charges high prices. 
D)  Michael's Movies should charge low prices when Frank's Flicks charges low prices. 
E)  a and d 
A)  Michael's Movies should charge high prices when Frank's Flicks charges high prices. 
B)  Michael's Movies should charge high prices when Frank's Flicks charges low prices. 
C)  Michael's Movies should charge low prices when Frank's Flicks charges high prices. 
D)  Michael's Movies should charge low prices when Frank's Flicks charges low prices. 
E)  a and d

Question 10

Given the following tables, Nash equilibrium occurs in the:

Accepted Answer

A)  upper left cell 
B)  lower left cell 
C)  upper right cell 
D)  lower right cell 
E)  does not occur 
A)  upper left cell 
B)  lower left cell 
C)  upper right cell 
D)  lower right cell 
E)  does not occur

Question 11

Asymmetric information is when one party to a transaction has better information than another.

Accepted Answer

A) True 
 B)False

Question 12

A dominated strategy is one that is best for the player no matter the choice exercised by the player's rival.

Accepted Answer

A) True 
 B)False

Question 13

The following game tree is for two martial arts companies Kirk's Kickboxing and Becky's Blackbelt) that are trying to determine if they should open a new store in Alaska.
 
What is the optimal strategy for Kirk's Kickboxing?

Accepted Answer

A)  Kirk's Kickboxing should charge high prices when Becky's Blackbelt charges low prices 
B)  Kirk's Kickboxing should charge high prices when Becky's Blackbelt charges high prices 
C)  Kirk's Kickboxing should charge low prices when Becky's Blackbelt charges low prices 
D)  Kirk's Kickboxing should charge low prices when Becky's Blackbelt charges high prices 
E)  Both c and d 
A)  Kirk's Kickboxing should charge high prices when Becky's Blackbelt charges low prices 
B)  Kirk's Kickboxing should charge high prices when Becky's Blackbelt charges high prices 
C)  Kirk's Kickboxing should charge low prices when Becky's Blackbelt charges low prices 
D)  Kirk's Kickboxing should charge low prices when Becky's Blackbelt charges high prices 
E)  Both c and d

Question 14

The following table is for two martial arts companies that are trying to determine if they should open a new store in Alaska.   Given the information in the table:

Accepted Answer

A)  Kirk's Kickboxing will enter the market first and Becky's Blackbelt will follow 
B)  Kirk's Kickboxing will enter the market first and Becky's Blackbelt will not follow 
C)  Becky's Blackbelt will enter the market first and Kirk's Kickboxing will follow 
D)  Becky's Blackbelt will enter the market first and Kirk's Kickboxing will not follow 
E)  None of the above 
A)  Kirk's Kickboxing will enter the market first and Becky's Blackbelt will follow 
B)  Kirk's Kickboxing will enter the market first and Becky's Blackbelt will not follow 
C)  Becky's Blackbelt will enter the market first and Kirk's Kickboxing will follow 
D)  Becky's Blackbelt will enter the market first and Kirk's Kickboxing will not follow 
E)  None of the above

Question 15

The economic cost incurred by individuals and/or firms associated with analyzing and make a decision to engage in a transaction are known as:

Accepted Answer

A)  opportunity costs 
B)  game costs 
C)  search costs 
D)  marginal cost 
E)  reasonable cost 
A)  opportunity costs 
B)  game costs 
C)  search costs 
D)  marginal cost 
E)  reasonable cost

Question 16

Anne runs a convenience store in a college town. Her imported and more expensive beer) not big seller. Anne wants to clear out her imported beer to make room for more Old English which she can't seem to keep stocked. Anne has decided the best way to do that is to offer incentives to employees who can convince the poor college students to buy the more expensive imports. An employee will have the following bonus schedule and has also placed a monetary value on their marginal effort.  
How many six packs of imported beer will this employee sell?

Accepted Answer

A)  10 
B)  15 
C)  20 
D)  25 
E)  30 
A)  10 
B)  15 
C)  20 
D)  25 
E)  30

Question 17

The following table is for two martial arts companies that are trying to determine if they should open a new store in Alaska. Given the information in the table, Kirk's Kickboxing will be the firm to enter the market first.

Accepted Answer

A) True 
 B)False

Question 18

A one-shot game is where each player acts simultaneously and without knowledge of each other's actions, and has only one strategy to use before the game ends.

Accepted Answer

A) True 
 B)False

Question 19

Given the following table, Nancy's Nook has a:

Accepted Answer

A)  dominant strategy which is to discount 
B)  dominant strategy which is to maintain 
C)  dominated strategy which is to discount 
D)  dominated strategy which is to maintain 
E)  both a and d 
A)  dominant strategy which is to discount 
B)  dominant strategy which is to maintain 
C)  dominated strategy which is to discount 
D)  dominated strategy which is to maintain 
E)  both a and d

Question 20

A choice or sequence thereof made by a decision maker who, generally, sacrifices other alternatives in order to pursue it is an):

Accepted Answer

A)  one shot game 
B)  strategy 
C)  opportunity cost 
D)  nash equilibrium 
E)  none of the above 
A)  one shot game 
B)  strategy 
C)  opportunity cost 
D)  nash equilibrium 
E)  none of the above

Search costs are the economic costs incurred by individuals and/or firms associated with analyzing and making a decision to engage in a transaction.

Extensive form game is a game that is characterized by sequences of decisions and will only have one Nash equilibrium.

Nash equilibrium is a game outcome in which each player obtains the best possible result given the strategy of the player's rivals).

A strategy is a choice or a sequence of choices made by a decision maker who has incurred the opportunity cost of that choice which may change based on how rivals react to that choice.

A term applied to a situation wherein the parties involved in a transaction have non-identical information that may affect the outcome of that transaction is:

The following game tree is for two video rental companies Michael's Movies and Frank's Flicks) that are trying to determine if they should open stores in a college town. What is the optimal strategy for Michael's Movies?

Given the following tables, Nash equilibrium occurs in the:

Asymmetric information is when one party to a transaction has better information than another.

A dominated strategy is one that is best for the player no matter the choice exercised by the player's rival.

The following game tree is for two martial arts companies Kirk's Kickboxing and Becky's Blackbelt) that are trying to determine if they should open a new store in Alaska. What is the optimal strategy for Kirk's Kickboxing?

The following table is for two martial arts companies that are trying to determine if they should open a new store in Alaska. Given the information in the table:

The economic cost incurred by individuals and/or firms associated with analyzing and make a decision to engage in a transaction are known as:

The following table is for two martial arts companies that are trying to determine if they should open a new store in Alaska. Given the information in the table, Kirk's Kickboxing will be the firm to enter the market first.

A one-shot game is where each player acts simultaneously and without knowledge of each other's actions, and has only one strategy to use before the game ends.

Given the following table, Nancy's Nook has a:

A choice or sequence thereof made by a decision maker who, generally, sacrifices other alternatives in order to pursue it is an):

Introduction, Basic Principles, and Methodology

Revenue of the Firm

Topics in Demand Analysis and Estimation

Economic Forecasting

Production Analysis

Cost of Production

Profit Analysis of the Firm

Perfect Competition and Monopoly

Monopolistic Competition and Oligopoly

Topics in Pricing and Profit Analysis

Factor Markets

Fundamentals of Project Evaluation

Risk in Project Analysis

Economics of Public Sector Decisions

Legal and Regulatory Environment of the Firm

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Exam 10: Games, Information and Strategy

Search costs are the economic costs incurred by individuals and/or firms associated with analyzing and making a decision to engage in a transaction.

Extensive form game is a game that is characterized by sequences of decisions and will only have one Nash equilibrium.

Nash equilibrium is a game outcome in which each player obtains the best possible result given the strategy of the player's rivals).

A strategy is a choice or a sequence of choices made by a decision maker who has incurred the opportunity cost of that choice which may change based on how rivals react to that choice.

A term applied to a situation wherein the parties involved in a transaction have non-identical information that may affect the outcome of that transaction is:

The following game tree is for two video rental companies Michael's Movies and Frank's Flicks) that are trying to determine if they should open stores in a college town. What is the optimal strategy for Michael's Movies?

Given the following tables, Nash equilibrium occurs in the:

Asymmetric information is when one party to a transaction has better information than another.

A dominated strategy is one that is best for the player no matter the choice exercised by the player's rival.

The following game tree is for two martial arts companies Kirk's Kickboxing and Becky's Blackbelt) that are trying to determine if they should open a new store in Alaska. What is the optimal strategy for Kirk's Kickboxing?

The following table is for two martial arts companies that are trying to determine if they should open a new store in Alaska. Given the information in the table:

The economic cost incurred by individuals and/or firms associated with analyzing and make a decision to engage in a transaction are known as:

The following table is for two martial arts companies that are trying to determine if they should open a new store in Alaska. Given the information in the table, Kirk's Kickboxing will be the firm to enter the market first.

A one-shot game is where each player acts simultaneously and without knowledge of each other's actions, and has only one strategy to use before the game ends.

Given the following table, Nancy's Nook has a:

A choice or sequence thereof made by a decision maker who, generally, sacrifices other alternatives in order to pursue it is an):

Introduction, Basic Principles, and Methodology

Revenue of the Firm

Topics in Demand Analysis and Estimation

Economic Forecasting

Production Analysis

Cost of Production

Profit Analysis of the Firm

Perfect Competition and Monopoly

Monopolistic Competition and Oligopoly

Topics in Pricing and Profit Analysis

Factor Markets

Fundamentals of Project Evaluation

Risk in Project Analysis

Economics of Public Sector Decisions

Legal and Regulatory Environment of the Firm

Filters