Question 1

In games, strategies are:

Accepted Answer

A) the outcomes players want to achieve. 
B) identical, as everyone wants to achieve the same goal. 
C) the plans of action that players follow to achieve their goals. 
D) All of these statements are true. 
A) the outcomes players want to achieve. 
B) identical, as everyone wants to achieve the same goal. 
C) the plans of action that players follow to achieve their goals. 
D) All of these statements are true.

Question 2

The ability to make counteroffers transforms bargaining from a game in which ___________ trumps everything to a game in which ____________ is the winning strategy.

Accepted Answer

A) patience; the first-mover advantage 
B) a commitment strategy; self-interested behavior 
C) the first-mover advantage; patience 
D) the first-mover advantage; cooperation 
A) patience; the first-mover advantage 
B) a commitment strategy; self-interested behavior 
C) the first-mover advantage; patience 
D) the first-mover advantage; cooperation

Question 3

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure, Joe:

Accepted Answer

A) has a dominant strategy to put forth high effort. 
B) does not have a dominant strategy. 
C) has a dominant strategy to put forth low effort. 
D) will reach an optimum outcome by acting in his own self-interest. 
A) has a dominant strategy to put forth high effort. 
B) does not have a dominant strategy. 
C) has a dominant strategy to put forth low effort. 
D) will reach an optimum outcome by acting in his own self-interest.

Question 4

To economists, games:can involve one person or multiple people.require at least two people.are situations in which people act in another individual's interestare situations in which one player's outcome depends on another player's choices.

Accepted Answer

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

Question 5

According to the figure shown, if Nike commits to charging a high price, then adidas should:

Accepted Answer

A) charge a high price. 
B) charge a low price. 
C) leave the market. 
D) give an ultimatum. 
A) charge a high price. 
B) charge a low price. 
C) leave the market. 
D) give an ultimatum.

Question 6

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure, if Sarah puts forth low effort, then Joe should:

Accepted Answer

A) put forth high effort. 
B) put forth low effort. 
C) refrain from making a decision. 
D) convince Sarah to put forth high effort. 
A) put forth high effort. 
B) put forth low effort. 
C) refrain from making a decision. 
D) convince Sarah to put forth high effort.

Question 7

Reaching a Nash equilibrium means that:

Accepted Answer

A) the outcome of the game will be positive-positive. 
B) a cooperative equilibrium has been reached. 
C) no player would want to change strategy upon discovering what other players are doing. 
D) one player will always want to change strategy upon discovering the decisions of other players. 
A) the outcome of the game will be positive-positive. 
B) a cooperative equilibrium has been reached. 
C) no player would want to change strategy upon discovering what other players are doing. 
D) one player will always want to change strategy upon discovering the decisions of other players.

Question 8

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete at these prices. The Rock Shop is trying to decide whether or not it should enter the market.Which of the following statements about the game in this figure is true?

Accepted Answer

A) The Rock Shop will choose not to enter. 
B) The Rock Shop will choose to enter, and MiiTunes will charge low prices. 
C) Neither store has a dominant strategy, so the game's outcome cannot be predicted. 
D) The Rock Shop will choose to enter, and MiiTunes will charge high prices. 
A) The Rock Shop will choose not to enter. 
B) The Rock Shop will choose to enter, and MiiTunes will charge low prices. 
C) Neither store has a dominant strategy, so the game's outcome cannot be predicted. 
D) The Rock Shop will choose to enter, and MiiTunes will charge high prices.

Question 9

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete at these prices. The Rock Shop is trying to decide whether or not it should enter the market.If MiiTunes chooses its dominant strategy, we can predict that The Rock Shop:

Accepted Answer

A) will enter the market and will earn $4 million. 
B) will enter the market and will lose $2 million. 
C) will not enter the market and will earn $0. 
D) The Rock Shop's decision cannot be predicted because it does not have a dominant strategy. 
A) will enter the market and will earn $4 million. 
B) will enter the market and will lose $2 million. 
C) will not enter the market and will earn $0. 
D) The Rock Shop's decision cannot be predicted because it does not have a dominant strategy.

Question 10

First-mover advantage is more important _______ than _______.

Accepted Answer

A) in a repeated game; in a sequential game 
B) in a repeated sequential game; in a one-round sequential game 
C) to those who have less to bargain with; to those who have more to bargain with 
D) in an ultimatum game; in a repeated game 
A) in a repeated game; in a sequential game 
B) in a repeated sequential game; in a one-round sequential game 
C) to those who have less to bargain with; to those who have more to bargain with 
D) in an ultimatum game; in a repeated game

Question 11

One way to summarize the actions and payoffs of a sequential game is to use a:

Accepted Answer

A) decision matrix. 
B) decision tree. 
C) payoff tree. 
D) flowchart. 
A) decision matrix. 
B) decision tree. 
C) payoff tree. 
D) flowchart.

Question 12

The game in the figure shown will result in which stable outcome?

Accepted Answer

A) Nike charges a high price and adidas charges a low price. 
B) Nike charges a low price and adidas charges a high price. 
C) Nike and adidas both charge a low price. 
D) Nike and adidas both charge a high price. 
A) Nike charges a high price and adidas charges a low price. 
B) Nike charges a low price and adidas charges a high price. 
C) Nike and adidas both charge a low price. 
D) Nike and adidas both charge a high price.

Question 13

Strategies and incentives used in one-time games when games are repeated:

Accepted Answer

A) continue to work the same. 
B) often work quite differently. 
C) would never be used. 
D) None of these statements are true. 
A) continue to work the same. 
B) often work quite differently. 
C) would never be used. 
D) None of these statements are true.

Question 14

{MISSING IMAGE}According to the figure shown, Apple:

Accepted Answer

A) should charge a low price, regardless of what Google chooses to do. 
B) should charge a high price, regardless of what Google chooses to do. 
C) does not have a dominant strategy. 
D) should use the first-mover advantage and charge a low price. 
A) should charge a low price, regardless of what Google chooses to do. 
B) should charge a high price, regardless of what Google chooses to do. 
C) does not have a dominant strategy. 
D) should use the first-mover advantage and charge a low price.

Question 15

Which of the following statements is true regarding collusion?

Accepted Answer

A) The U.S. government encourages businesses to collude. 
B) Business who collude compete outside the public eye, and thus have noncooperative outcomes. 
C) Collusion between businesses does not serve the public interest. 
D) Businesses who collude act in their own self-interest and ignore other players' decisions. 
A) The U.S. government encourages businesses to collude. 
B) Business who collude compete outside the public eye, and thus have noncooperative outcomes. 
C) Collusion between businesses does not serve the public interest. 
D) Businesses who collude act in their own self-interest and ignore other players' decisions.

Question 16

Cooperation between businesses to hold prices high is known as _______ and the noncooperative equilibrium in business is called _______.

Accepted Answer

A) collusion; competition 
B) competition; collusion 
C) a commitment strategy; collusion 
D) collusion; a commitment strategy 
A) collusion; competition 
B) competition; collusion 
C) a commitment strategy; collusion 
D) collusion; a commitment strategy

Question 17

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete with these prices. The Rock Shop is trying to decide whether or not it should enter the market.If MiiTunes and The Rock Shop are faced with the choices outlined in the figure, what outcome can we predict?

Accepted Answer

A) MiiTunes will charge high prices and The Rock Shop will not enter the market. 
B) There is more than one stable outcome to this game. 
C) There is no stable outcome to this game. 
D) None of these statements are true. 
A) MiiTunes will charge high prices and The Rock Shop will not enter the market. 
B) There is more than one stable outcome to this game. 
C) There is no stable outcome to this game. 
D) None of these statements are true.

Question 18

Cooperation in a prisoner's dilemma game

Accepted Answer

A) always benefits the players and the public. 
B) always benefits the players, but does not always benefit the public. 
C) always benefits the public, but does not always benefit the players. 
D) does not always benefit the players and the public. 
A) always benefits the players and the public. 
B) always benefits the players, but does not always benefit the public. 
C) always benefits the public, but does not always benefit the players. 
D) does not always benefit the players and the public.

Question 19

The figure shown displays the choices that could be made by two coffee shops: Starbucks and Dunkin' Donuts. Both companies are trying to decide whether or not to expand into a new area. The area can only handle one coffee shop's expansion, and the expansion of one shop will cause the other to lose some business. If both coffee shops expand, the market will become saturated and neither will do well. The payoffs for these shops are the additional profits (or losses)they will earn.This game is a version of:

Accepted Answer

A) the prisoner's dilemma. 
B) the first-mover advantage. 
C) a sequential game. 
D) a repeated game. 
A) the prisoner's dilemma. 
B) the first-mover advantage. 
C) a sequential game. 
D) a repeated game.

Question 20

A decision matrix:

Accepted Answer

A) summarizes the players, strategies, and payoffs associated with a simultaneous-move game. 
B) outlines the clear outcome of any strategy-based game. 
C) provides the same information as a decision tree, just in a different format. 
D) All of these are true. 
A) summarizes the players, strategies, and payoffs associated with a simultaneous-move game. 
B) outlines the clear outcome of any strategy-based game. 
C) provides the same information as a decision tree, just in a different format. 
D) All of these are true.

In games, strategies are:

The ability to make counteroffers transforms bargaining from a game in which _ trumps everything to a game in which __ is the winning strategy.

To economists, games:can involve one person or multiple people.require at least two people.are situations in which people act in another individual's interestare situations in which one player's outcome depends on another player's choices.

According to the figure shown, if Nike commits to charging a high price, then adidas should:

Reaching a Nash equilibrium means that:

First-mover advantage is more important _ than _.

One way to summarize the actions and payoffs of a sequential game is to use a:

The game in the figure shown will result in which stable outcome?

Strategies and incentives used in one-time games when games are repeated:

{MISSING IMAGE}According to the figure shown, Apple:

Which of the following statements is true regarding collusion?

Cooperation between businesses to hold prices high is known as _ and the noncooperative equilibrium in business is called _.

Cooperation in a prisoner's dilemma game

A decision matrix:

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention

Consumer Behavior

Behavioral Economics: a Closer Look at Decision Making

Information

Time and Uncertainty

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Facts of Production

International Trade

Externalities

Public Goods and Common Resources

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Public Policy and Choice Architecture

Filters

Exam 9: Game Theory and Strategic Thinking

In games, strategies are:

The ability to make counteroffers transforms bargaining from a game in which ___________ trumps everything to a game in which ____________ is the winning strategy.

To economists, games:can involve one person or multiple people.require at least two people.are situations in which people act in another individual's interestare situations in which one player's outcome depends on another player's choices.

According to the figure shown, if Nike commits to charging a high price, then adidas should:

Reaching a Nash equilibrium means that:

First-mover advantage is more important _______ than _______.

One way to summarize the actions and payoffs of a sequential game is to use a:

The game in the figure shown will result in which stable outcome?

Strategies and incentives used in one-time games when games are repeated:

{MISSING IMAGE}According to the figure shown, Apple:

Which of the following statements is true regarding collusion?

Cooperation between businesses to hold prices high is known as _______ and the noncooperative equilibrium in business is called _______.

Cooperation in a prisoner's dilemma game

A decision matrix:

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention

Consumer Behavior

Behavioral Economics: a Closer Look at Decision Making

Information

Time and Uncertainty

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Facts of Production

International Trade

Externalities

Public Goods and Common Resources

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Public Policy and Choice Architecture

Filters

The ability to make counteroffers transforms bargaining from a game in which _ trumps everything to a game in which __ is the winning strategy.

First-mover advantage is more important _ than _.

Cooperation between businesses to hold prices high is known as _ and the noncooperative equilibrium in business is called _.