Question 1

Use the following to answer question:
Table 12.20  
-(Table 12.20) Payoffs represent profits in millions of dollars. Which of the following statements is (are) TRUE?

Accepted Answer

A)  I and III 
B)  II 
C)  II and III 
D)  I, II, and III 
A)  I and III 
B)  II 
C)  II and III 
D)  I, II, and III

Question 2

Use the following to answer question:
(Table: Lemonade)  
-(Table: Lemonade) Abe and Sarah operate lemonade stands in the same neighborhood. Payoffs are in quarters . This can also be extended: c + ad + cd2 + ad3. . . = (c + ad)/(1 - d2).

Accepted Answer

Both players are better off if they can

Question 3

Use the following to answer question:
Table 12.34  
-(Table 12.34) Represent the normal-form game as a sequential game, with Firm A making the first decision. What is the outcome of this game?

Accepted Answer

The answer of Use the following to answer question:
Table 12.34...

Question 4

Suppose that in a two-player game player A can move a game piece Up or Down; player B can choose Left or Right. Payoffs for this game are given in the table:   a. What are the pure-strategy Nash equilibria if any?
b. What is the mixed-strategy Nash equilibrium?

Accepted Answer

a. There are two pure-strategy Nash equi

Question 5

Use the following to answer questions 26-28:
Table 12.16  
-(Table 12.16) The payoffs represent profits in thousands of dollars. Suppose that two firms are playing an infinitely repeated game. In period 6, Firm B decides it will no longer cooperate with Firm A. If Firm A is using a grim trigger strategy, Firm A will choose:

Accepted Answer

A)  a low price in period 7 and all future periods. 
B)  a low price in period 7 and a high price in all future periods. 
C)  to set price below marginal cost and drive Firm B out of the market. 
D)  to maintain a high price in all future periods. 
A)  a low price in period 7 and all future periods. 
B)  a low price in period 7 and a high price in all future periods. 
C)  to set price below marginal cost and drive Firm B out of the market. 
D)  to maintain a high price in all future periods.

Question 6

To solve for a mixed-strategy equilibrium in a two-player, two-strategy game (two-by-two game):

Accepted Answer

A)  set the expected value of playing the first strategy for the first player equal to the expected value of playing the first strategy for the second player and solve for the implied probability. 
B)  always set the probability half to the first strategy and half to the second strategy. 
C)  for each player, roll a die to assign the probability of the first strategy and then calculate the implied second probability using the formula that probabilities must sum to one. 
D)  for each player, set the expected value of playing the first strategy equal to the expected value of playing the second strategy and solve for the implied probabilities. 
A)  set the expected value of playing the first strategy for the first player equal to the expected value of playing the first strategy for the second player and solve for the implied probability. 
B)  always set the probability half to the first strategy and half to the second strategy. 
C)  for each player, roll a die to assign the probability of the first strategy and then calculate the implied second probability using the formula that probabilities must sum to one. 
D)  for each player, set the expected value of playing the first strategy equal to the expected value of playing the second strategy and solve for the implied probabilities.

Question 7

Use the following to answer question:
Table 12.11  
-(Table 12.11) The payoffs represent dollars won or lost. Which of the following statements is TRUE?

Accepted Answer

A)  The Nash equilibria are (1, -1) and (-1 , 1). 
B)  The dominant strategy for Player B is pick odd number. 
C)  In mixed strategy, the Nash equilibrium is for both players to randomly select their strategy with a 50% probability. 
D)  The pure-strategy equilibrium is (odd number, even number). 
A)  The Nash equilibria are (1, -1) and (-1 , 1). 
B)  The dominant strategy for Player B is pick odd number. 
C)  In mixed strategy, the Nash equilibrium is for both players to randomly select their strategy with a 50% probability. 
D)  The pure-strategy equilibrium is (odd number, even number).

Question 8

Use the following to answer questions 10-11:
Table 12.5  
-(Table 12.5) Payoffs represent profits in millions of dollars. In a Nash equilibrium, Sports Illustrated will run the _____ cover story and ESPN Magazine will run the _____ cover story.

Accepted Answer

A)  Brett Favre; Brett Favre 
B)  Brett Favre; Tim Tebow 
C)  Tim Tebow; Brett Favre 
D)  Tim Tebow; Tim Tebow 
A)  Brett Favre; Brett Favre 
B)  Brett Favre; Tim Tebow 
C)  Tim Tebow; Brett Favre 
D)  Tim Tebow; Tim Tebow

Question 9

Robert and Rosalie are deciding whether to request fish or chicken at a wedding that they will attend. If they order different meals, they can try each of the dishes by sharing. Their payoffs in terms of their happiness are as follows.   a. What are the pure-strategy Nash equilibria if any?
b. What is the mixed-strategy Nash equilibrium?

Accepted Answer

a. By the check method: @#IMG-DLM& There are two p

Question 10

Use the following to answer question:
Table 12.24  
-(Table 12.24) Payoffs represent profits in millions of dollars.

Accepted Answer

a. Right.
b. Left.
c. For x > 10, Firm 1

Question 11

The following game has:

Accepted Answer

A)  two pure-strategy equilibria but no mixed-strategy equilibria. 
B)  two pure -strategy equilibria and one mixed-strategy equilibrium. 
C)  no equilibria. 
D)  two pure-strategy equilibria and an infinite number of mixed-strategy equilibria. 
A)  two pure-strategy equilibria but no mixed-strategy equilibria. 
B)  two pure -strategy equilibria and one mixed-strategy equilibrium. 
C)  no equilibria. 
D)  two pure-strategy equilibria and an infinite number of mixed-strategy equilibria.

Question 12

The following game has _____ pure-strategy equilibrium (equilibria) and (but) _____ mixed-strategy equilibrium.

Accepted Answer

A)  two; no 
B)  two; one 
C)  one; no 
D)  one; one 
A)  two; no 
B)  two; one 
C)  one; no 
D)  one; one

Question 13

Consider a game in which a person called the proposer is given $200. The proposer must choose to split the money with a person called the responder. The money must be split in one of three ways:
(1) Proposer keeps $199; responder gets $1.
(2) Proposer keeps $100; responder gets $100.
(3) Proposer keeps $50; responder gets $150.
The responder can either accept or reject the proposer's offer. If the responder rejects the offer, both players get nothing. Illustrate this game in extensive form. Using backward induction, what is the outcome of this game?

Accepted Answer

The outcome of this game is fo

Question 14

Use the following to answer question:
Figure 12.7  
-(Figure 12.7) Suppose that Player A promises a $2 side payment to Player B if Player B chooses Pass. As a result of the side payment, the game's outcome will change from:

Accepted Answer

A)  (2 , 10) to (10 , 9). 
B)  (5 , 0) to (8 , 11). 
C)  (5 , 0) to (7 , 2). 
D)  (2 , 10) to (8 , 11). 
A)  (2 , 10) to (10 , 9). 
B)  (5 , 0) to (8 , 11). 
C)  (5 , 0) to (7 , 2). 
D)  (2 , 10) to (8 , 11).

Question 15

Use the following to answer question:
Figure 12.8  
-(Figure 12.8) Which of the following is an example of a noncredible threat?

Accepted Answer

A)  O's Groceries tells the Food Palace that it is committed to entering the market. 
B)  Food Palace tells O's Groceries that it will build a large store whether or not O's Groceries enters the market. 
C)  Food Palace tells O's Groceries that it will build a small store if O's Groceries enters the market. 
D)  O's Groceries tells the Food Palace that it will not enter the market. 
A)  O's Groceries tells the Food Palace that it is committed to entering the market. 
B)  Food Palace tells O's Groceries that it will build a large store whether or not O's Groceries enters the market. 
C)  Food Palace tells O's Groceries that it will build a small store if O's Groceries enters the market. 
D)  O's Groceries tells the Food Palace that it will not enter the market.

Question 16

A simultaneous game:

Accepted Answer

A)  requires that both participants play exactly the same strategy at the same time. 
B)  involves at least one participant playing a random strategy after first observing the opponent's strategies. 
C)  necessitates participants revealing their strategy at the same time without knowing the strategy of their opponent. 
D)  requires both players to base their strategy on backward induction. 
A)  requires that both participants play exactly the same strategy at the same time. 
B)  involves at least one participant playing a random strategy after first observing the opponent's strategies. 
C)  necessitates participants revealing their strategy at the same time without knowing the strategy of their opponent. 
D)  requires both players to base their strategy on backward induction.

Question 17

Answer the following questions.

Accepted Answer

a. Backward induction is a method of sol

Question 18

Use the following to answer question:
Figure 12.2  
-(Figure 12.2) Two firms are considering whether to expand their production capacity. Which of the following statements is TRUE?

Accepted Answer

A)  The outcome is (10 , 6) or (6 , 10). 
B)  There is no first-mover advantage. 
C)  Neither firm expands its production capacity. 
D)  There is a first-mover advantage. 
A)  The outcome is (10 , 6) or (6 , 10). 
B)  There is no first-mover advantage. 
C)  Neither firm expands its production capacity. 
D)  There is a first-mover advantage.

Question 19

Use the following to answer question:
Table 12.1  
-(Table 12.1) Randy and Todd are playing a simultaneous game. Randy's dominant strategy is _____. and Todd's dominant strategy is _____.

Accepted Answer

A)  Bottom; Left 
B)  Top; Left 
C)  Bottom; Right 
D)  Top; Right 
A)  Bottom; Left 
B)  Top; Left 
C)  Bottom; Right 
D)  Top; Right

Question 20

According to Goolsbee and Syverson, how did incumbent airlines respond to the entry of Southwest Airlines?

Accepted Answer

A)  They raised airfares just before Southwest's arrival and then cut airfares when Southwest began operating. 
B)  They lowered airfares just before Southwest's arrival and then raised airfares when Southwest began operating. 
C)  They began cutting airfare as early as 1 to 2 years before Southwest began operating from the same airport. 
D)  They kept airfares unchanged before Southwest's arrival and then lowered airfares when Southwest began operating. 
A)  They raised airfares just before Southwest's arrival and then cut airfares when Southwest began operating. 
B)  They lowered airfares just before Southwest's arrival and then raised airfares when Southwest began operating. 
C)  They began cutting airfare as early as 1 to 2 years before Southwest began operating from the same airport. 
D)  They kept airfares unchanged before Southwest's arrival and then lowered airfares when Southwest began operating.

Use the following to answer question: Table 12.20 -(Table 12.20) Payoffs represent profits in millions of dollars. Which of the following statements is (are) TRUE?

Use the following to answer question: (Table: Lemonade) -(Table: Lemonade) Abe and Sarah operate lemonade stands in the same neighborhood. Payoffs are in quarters . This can also be extended: c + ad + cd² + ad³. . . = (c + ad)/(1 - d²).

Use the following to answer question: Table 12.34 -(Table 12.34) Represent the normal-form game as a sequential game, with Firm A making the first decision. What is the outcome of this game?

Suppose that in a two-player game player A can move a game piece Up or Down; player B can choose Left or Right. Payoffs for this game are given in the table: a. What are the pure-strategy Nash equilibria if any? b. What is the mixed-strategy Nash equilibrium?

To solve for a mixed-strategy equilibrium in a two-player, two-strategy game (two-by-two game):

Use the following to answer question: Table 12.11 -(Table 12.11) The payoffs represent dollars won or lost. Which of the following statements is TRUE?

Use the following to answer questions 10-11: Table 12.5 -(Table 12.5) Payoffs represent profits in millions of dollars. In a Nash equilibrium, Sports Illustrated will run the _ cover story and ESPN Magazine will run the _ cover story.

Use the following to answer question: Table 12.24 -(Table 12.24) Payoffs represent profits in millions of dollars.

The following game has:

The following game has _ pure-strategy equilibrium (equilibria) and (but) _ mixed-strategy equilibrium.

Use the following to answer question: Figure 12.7 -(Figure 12.7) Suppose that Player A promises a $2 side payment to Player B if Player B chooses Pass. As a result of the side payment, the game's outcome will change from:

Use the following to answer question: Figure 12.8 -(Figure 12.8) Which of the following is an example of a noncredible threat?

A simultaneous game:

Answer the following questions.

Use the following to answer question: Figure 12.2 -(Figure 12.2) Two firms are considering whether to expand their production capacity. Which of the following statements is TRUE?

Use the following to answer question: Table 12.1 -(Table 12.1) Randy and Todd are playing a simultaneous game. Randy's dominant strategy is _. and Todd's dominant strategy is _.

According to Goolsbee and Syverson, how did incumbent airlines respond to the entry of Southwest Airlines?

Supply and Demand

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

Exam 12: Game Theory

Use the following to answer question: Table 12.20 -(Table 12.20) Payoffs represent profits in millions of dollars. Which of the following statements is (are) TRUE?

Use the following to answer question: (Table: Lemonade) -(Table: Lemonade) Abe and Sarah operate lemonade stands in the same neighborhood. Payoffs are in quarters . This can also be extended: c + ad + cd2 + ad3. . . = (c + ad)/(1 - d2).

Use the following to answer question: Table 12.34 -(Table 12.34) Represent the normal-form game as a sequential game, with Firm A making the first decision. What is the outcome of this game?

Suppose that in a two-player game player A can move a game piece Up or Down; player B can choose Left or Right. Payoffs for this game are given in the table: a. What are the pure-strategy Nash equilibria if any? b. What is the mixed-strategy Nash equilibrium?

To solve for a mixed-strategy equilibrium in a two-player, two-strategy game (two-by-two game):

Use the following to answer question: Table 12.11 -(Table 12.11) The payoffs represent dollars won or lost. Which of the following statements is TRUE?

Use the following to answer questions 10-11: Table 12.5 -(Table 12.5) Payoffs represent profits in millions of dollars. In a Nash equilibrium, Sports Illustrated will run the _____ cover story and ESPN Magazine will run the _____ cover story.

Use the following to answer question: Table 12.24 -(Table 12.24) Payoffs represent profits in millions of dollars.

The following game has:

The following game has _____ pure-strategy equilibrium (equilibria) and (but) _____ mixed-strategy equilibrium.

Use the following to answer question: Figure 12.7 -(Figure 12.7) Suppose that Player A promises a $2 side payment to Player B if Player B chooses Pass. As a result of the side payment, the game's outcome will change from:

Use the following to answer question: Figure 12.8 -(Figure 12.8) Which of the following is an example of a noncredible threat?

A simultaneous game:

Answer the following questions.

Use the following to answer question: Figure 12.2 -(Figure 12.2) Two firms are considering whether to expand their production capacity. Which of the following statements is TRUE?

Use the following to answer question: Table 12.1 -(Table 12.1) Randy and Todd are playing a simultaneous game. Randy's dominant strategy is _____. and Todd's dominant strategy is _____.

According to Goolsbee and Syverson, how did incumbent airlines respond to the entry of Southwest Airlines?

Supply and Demand

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

Use the following to answer question: (Table: Lemonade) -(Table: Lemonade) Abe and Sarah operate lemonade stands in the same neighborhood. Payoffs are in quarters . This can also be extended: c + ad + cd² + ad³. . . = (c + ad)/(1 - d²).

Use the following to answer questions 10-11: Table 12.5 -(Table 12.5) Payoffs represent profits in millions of dollars. In a Nash equilibrium, Sports Illustrated will run the _ cover story and ESPN Magazine will run the _ cover story.

The following game has _ pure-strategy equilibrium (equilibria) and (but) _ mixed-strategy equilibrium.

Use the following to answer question: Table 12.1 -(Table 12.1) Randy and Todd are playing a simultaneous game. Randy's dominant strategy is _. and Todd's dominant strategy is _.