Question 1

Tacit collusion is collusion without a formal agreement or illegal communications among firms.

Accepted Answer

A) True 
 B)False

Question 2

Adverse selection is a self-sorting process that occurs when the information characteristics of a transaction are such that undesirable products, services or customers are attracted to it.

Accepted Answer

A) True 
 B)False

Question 3

A one-shot game is a game wherein each player has complete knowledge of what their rivals will do and has only one opportunity to pursue their chosen strategy prior to the game's end.

Accepted Answer

A) True 
 B)False

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. For both firms, defecting from their agreement is a better choice than collusion.

Accepted Answer

A) True 
 B)False

Question 5

A credible threat is the threat of an action that a rival actually has the ability to carry out.

Accepted Answer

A) True 
 B)False

Question 6

A first mover advantage in a sequential game is a beneficial outcome that accrues to the player who exercises the first strategic choice.

Accepted Answer

A) True 
 B)False

Question 7

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. Neither firm will charge a lower price as there is a credible threat of punishment from the other.

Accepted Answer

A) True 
 B)False

Question 8

A strategy that is best for a given player no matter the choice exercised by that player's rivals) is:

Accepted Answer

A)  dominated strategy 
B)  dominant strategy 
C)  nash strategy 
D)  iterative dominance strategy 
E)  first mover strategy 
A)  dominated strategy 
B)  dominant strategy 
C)  nash strategy 
D)  iterative dominance strategy 
E)  first mover strategy

Question 9

Given the following table, Nancy's Nook has a dominant strategy.

Accepted Answer

A) True 
 B)False

Question 10

A one shot game occurs when:

Accepted Answer

A)  each player acts simultaneously and without knowledge of each other's actions, and has only one strategy to use before the game ends. 
B)  each player acts simultaneously and with knowledge of each other's actions, and has only one strategy to use before the game ends. 
C)  each player acts simultaneously and without knowledge of each other's actions, and has many strategies to use before the game ends. 
D)  each player has complete knowledge of what their rivals will do and has only one opportunity to pursue their chosen strategy prior to the game's end. 
E)  each player has complete knowledge of what their rivals will do and has several opportunities to pursue their chosen strategy prior to the game's end. 
A)  each player acts simultaneously and without knowledge of each other's actions, and has only one strategy to use before the game ends. 
B)  each player acts simultaneously and with knowledge of each other's actions, and has only one strategy to use before the game ends. 
C)  each player acts simultaneously and without knowledge of each other's actions, and has many strategies to use before the game ends. 
D)  each player has complete knowledge of what their rivals will do and has only one opportunity to pursue their chosen strategy prior to the game's end. 
E)  each player has complete knowledge of what their rivals will do and has several opportunities to pursue their chosen strategy prior to the game's end.

Question 11

Asymmetric information is when both parties to a transaction have equal information and that information is free.

Accepted Answer

A) True 
 B)False

Question 12

Costs associated with making certain the terms of an agreement are complied with are called incentive costs.

Accepted Answer

A) True 
 B)False

Question 13

A strategy that will be rejected by a given player no matter the choice exercised by that player's rivals is:

Accepted Answer

A)  dominated strategy 
B)  dominant strategy 
C)  nash strategy 
D)  iterative dominance strategy 
E)  first mover strategy 
A)  dominated strategy 
B)  dominant strategy 
C)  nash strategy 
D)  iterative dominance strategy 
E)  first mover strategy

Question 14

Rationally, one would only continue to search until one perceives that the marginal cost of additional searching exceeds its marginal benefit.

Accepted Answer

A) True 
 B)False

Question 15

Given the following table, Nash Equilibrium occurs in the lower right hand cell.

Accepted Answer

A) True 
 B)False

Question 16

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 95 futons for a bonus of $250.00 dollars.

Accepted Answer

A) True 
 B)False

Question 17

If you buy a priceless piece of artwork at an auction for mere dollars because you are the only one who recognizes the artist, you have used private information to your advantage.

Accepted Answer

A) True 
 B)False

Question 18

Costs associated with making certain the terms of an agreement are complied with are called monitoring costs.

Accepted Answer

A) True 
 B)False

Tacit collusion is collusion without a formal agreement or illegal communications among firms.

Adverse selection is a self-sorting process that occurs when the information characteristics of a transaction are such that undesirable products, services or customers are attracted to it.

A one-shot game is a game wherein each player has complete knowledge of what their rivals will do and has only one opportunity to pursue their chosen strategy prior to the game's end.

A credible threat is the threat of an action that a rival actually has the ability to carry out.

A first mover advantage in a sequential game is a beneficial outcome that accrues to the player who exercises the first strategic choice.

A strategy that is best for a given player no matter the choice exercised by that player's rivals) is:

Given the following table, Nancy's Nook has a dominant strategy.

A one shot game occurs when:

Asymmetric information is when both parties to a transaction have equal information and that information is free.

Costs associated with making certain the terms of an agreement are complied with are called incentive costs.

A strategy that will be rejected by a given player no matter the choice exercised by that player's rivals is:

Rationally, one would only continue to search until one perceives that the marginal cost of additional searching exceeds its marginal benefit.

Given the following table, Nash Equilibrium occurs in the lower right hand cell.

If you buy a priceless piece of artwork at an auction for mere dollars because you are the only one who recognizes the artist, you have used private information to your advantage.

Costs associated with making certain the terms of an agreement are complied with are called monitoring costs.

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

Exam 10: Games, Information and Strategy

Tacit collusion is collusion without a formal agreement or illegal communications among firms.

Adverse selection is a self-sorting process that occurs when the information characteristics of a transaction are such that undesirable products, services or customers are attracted to it.

A one-shot game is a game wherein each player has complete knowledge of what their rivals will do and has only one opportunity to pursue their chosen strategy prior to the game's end.

A credible threat is the threat of an action that a rival actually has the ability to carry out.

A first mover advantage in a sequential game is a beneficial outcome that accrues to the player who exercises the first strategic choice.

A strategy that is best for a given player no matter the choice exercised by that player's rivals) is:

Given the following table, Nancy's Nook has a dominant strategy.

A one shot game occurs when:

Asymmetric information is when both parties to a transaction have equal information and that information is free.

Costs associated with making certain the terms of an agreement are complied with are called incentive costs.

A strategy that will be rejected by a given player no matter the choice exercised by that player's rivals is:

Rationally, one would only continue to search until one perceives that the marginal cost of additional searching exceeds its marginal benefit.

Given the following table, Nash Equilibrium occurs in the lower right hand cell.

If you buy a priceless piece of artwork at an auction for mere dollars because you are the only one who recognizes the artist, you have used private information to your advantage.

Costs associated with making certain the terms of an agreement are complied with are called monitoring costs.

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