Question 1

A player can choose among three strategies: T, M, and B. Nevertheless, strategy B is dominated by strategy T. This means that

Accepted Answer

A) strategy T is always played. 
B) strategy B is never played. 
C) strategy B will be part of a Nash equilibrium. 
D) strategy M is never played. 
A) strategy T is always played. 
B) strategy B is never played. 
C) strategy B will be part of a Nash equilibrium. 
D) strategy M is never played.

Question 2

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant. The potential entrant cannot earn a profit if the incumbent

Accepted Answer

A) chooses the Cournot level of output. 
B) chooses the Stackelberg leader level of output. 
C) shuts down. 
D) deters entry. 
A) chooses the Cournot level of output. 
B) chooses the Stackelberg leader level of output. 
C) shuts down. 
D) deters entry.

Question 3

Which of the following constitutes a mixed strategy Nash equilibrium of the Odds and Evens game?

Accepted Answer

A) Play Even and Odd with 50% probability each. 
B) Play Even with 75% probability and Odd with 25% probability. 
C) Always play Even. 
D) This game has no mixed strategy Nash equilibrium. 
A) Play Even and Odd with 50% probability each. 
B) Play Even with 75% probability and Odd with 25% probability. 
C) Always play Even. 
D) This game has no mixed strategy Nash equilibrium.

Question 4

What is an example of the bidder's curse?

Accepted Answer

A) addiction to auctions 
B) paying less than the auctioned good value 
C) Bid a value that is higher than the price of the good at a retail store. 
D) Never win an auction. 
A) addiction to auctions 
B) paying less than the auctioned good value 
C) Bid a value that is higher than the price of the good at a retail store. 
D) Never win an auction.

Question 5

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. Which of the following is a Nash equilibrium?

Accepted Answer

A) Both firms make advanced computers. 
B) Both firms make basic computers. 
C) Firm A makes basic computers and firm B makes advanced computers. 
D) There are no Nash equilibria. 
A) Both firms make advanced computers. 
B) Both firms make basic computers. 
C) Firm A makes basic computers and firm B makes advanced computers. 
D) There are no Nash equilibria.

Question 6

With regard to preventing entry, if identical firms act simultaneously,

Accepted Answer

A) they cannot credibly threaten each other. 
B) they will all incur losses. 
C) only one firm will enter the market. 
D) none of them will enter the market. 
A) they cannot credibly threaten each other. 
B) they will all incur losses. 
C) only one firm will enter the market. 
D) none of them will enter the market.

Question 7

If an incumbent threatens to retaliate against entry, but its profits are greater under accommodated entry than under the proposed threat, potential entrants will ignore the threat.

Accepted Answer

A) True 
 B)False

Question 8

If neither firm has a dominant strategy, a Nash equilibrium cannot exist.

Accepted Answer

A) True 
 B)False

Question 9

In a two-player simultaneous game where neither player has a dominant strategy,

Accepted Answer

A) there is never a Nash equilibrium. 
B) there is only one Nash equilibrium. 
C) the actual outcome is unpredictable. 
D) the actual outcome will not be a Nash equilibrium. 
A) there is never a Nash equilibrium. 
B) there is only one Nash equilibrium. 
C) the actual outcome is unpredictable. 
D) the actual outcome will not be a Nash equilibrium.

Question 10

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, what will happen if the government offers a $30 subsidy to airlines that serve this route?

Accepted Answer

A) Both firms will enter profitably. 
B) Firm A will decide not to enter since firm B will. 
C) Firm B is still better off not entering. 
D) Neither firm will have a dominant strategy. 
A) Both firms will enter profitably. 
B) Firm A will decide not to enter since firm B will. 
C) Firm B is still better off not entering. 
D) Neither firm will have a dominant strategy.

Question 11

A dominated strategy

Accepted Answer

A) may be part of a Nash equilibrium. 
B) is never played. 
C) can be a best response. 
D) is always part of a mixed-strategy Nash equilibrium. 
A) may be part of a Nash equilibrium. 
B) is never played. 
C) can be a best response. 
D) is always part of a mixed-strategy Nash equilibrium.

Question 12

The result that different auction styles in which the good goes to the winner with the highest valuation of the good generate the same amount of revenue is called

Accepted Answer

A) Revenue Equivalence Theorem. 
B) Marginal Revenue Theory. 
C) Auction Revenue Theory. 
D) First Bid Revenue Theorem. 
A) Revenue Equivalence Theorem. 
B) Marginal Revenue Theory. 
C) Auction Revenue Theory. 
D) First Bid Revenue Theorem.

Question 13

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, which one of the following statements is TRUE?

Accepted Answer

A) Firm A does not have a dominant strategy. 
B) Firm B does not have a dominant strategy. 
C) Neither firm entering is a Nash equilibrium. 
D) The outcome of the game is unpredictable. 
A) Firm A does not have a dominant strategy. 
B) Firm B does not have a dominant strategy. 
C) Neither firm entering is a Nash equilibrium. 
D) The outcome of the game is unpredictable.

Question 14

In a non-cooperative, imperfect information, simultaneous-choice, one-period game, a Nash equilibrium

Accepted Answer

A) will never exist. 
B) will always include dominant strategies. 
C) will always result in both players taking the same action. 
D) may not maximize the sum of the firms' profits. 
A) will never exist. 
B) will always include dominant strategies. 
C) will always result in both players taking the same action. 
D) may not maximize the sum of the firms' profits.

Question 15

A player can choose among three strategies: L, C, and R. Strategy C is never a best response to the other player strategies. This means that

Accepted Answer

A) strategy C is always played. 
B) strategy C is never played. 
C) strategy C will be part of a Nash equilibrium. 
D) strategies L and R are never played. 
A) strategy C is always played. 
B) strategy C is never played. 
C) strategy C will be part of a Nash equilibrium. 
D) strategies L and R are never played.

Question 16

Collusion is more likely to occur when

Accepted Answer

A) there is fear of punishment for not colluding. 
B) there is a known finite time horizon. 
C) there are large gains to be made by cheating on an agreement. 
D) the game lasts only one period. 
A) there is fear of punishment for not colluding. 
B) there is a known finite time horizon. 
C) there are large gains to be made by cheating on an agreement. 
D) the game lasts only one period.

Question 17

In auctions, the winner always pays a price equal to the highest (his)bid.

Accepted Answer

A) True 
 B)False

Question 18

How can a firm be made better off by limiting its options?

Accepted Answer

By limiting its options, the firm commit

Question 19

A trigger strategy

Accepted Answer

A) is always a dominant strategy. 
B) is used to punish the player that reneges on agreements. 
C) is used to reward the player that never reneges on agreements. 
D) is a best response whenever all players cooperate. 
A) is always a dominant strategy. 
B) is used to punish the player that reneges on agreements. 
C) is used to reward the player that never reneges on agreements. 
D) is a best response whenever all players cooperate.

Question 20

One interesting feature of a prisoner's dilemma game is that

Accepted Answer

A) non-cooperative behavior leads to lower payoffs than cooperative behavior. 
B) it was only valid before the industrial revolution. 
C) individuals behave irrationally when they behave non-cooperatively. 
D) cooperative behavior leads to lower payoffs than non-cooperative behavior. 
A) non-cooperative behavior leads to lower payoffs than cooperative behavior. 
B) it was only valid before the industrial revolution. 
C) individuals behave irrationally when they behave non-cooperatively. 
D) cooperative behavior leads to lower payoffs than non-cooperative behavior.

A player can choose among three strategies: T, M, and B. Nevertheless, strategy B is dominated by strategy T. This means that

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant. The potential entrant cannot earn a profit if the incumbent

Which of the following constitutes a mixed strategy Nash equilibrium of the Odds and Evens game?

What is an example of the bidder's curse?

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. Which of the following is a Nash equilibrium?

With regard to preventing entry, if identical firms act simultaneously,

If an incumbent threatens to retaliate against entry, but its profits are greater under accommodated entry than under the proposed threat, potential entrants will ignore the threat.

If neither firm has a dominant strategy, a Nash equilibrium cannot exist.

In a two-player simultaneous game where neither player has a dominant strategy,

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, what will happen if the government offers a $30 subsidy to airlines that serve this route?

A dominated strategy

The result that different auction styles in which the good goes to the winner with the highest valuation of the good generate the same amount of revenue is called

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, which one of the following statements is TRUE?

In a non-cooperative, imperfect information, simultaneous-choice, one-period game, a Nash equilibrium

A player can choose among three strategies: L, C, and R. Strategy C is never a best response to the other player strategies. This means that

Collusion is more likely to occur when

In auctions, the winner always pays a price equal to the highest (his)bid.

How can a firm be made better off by limiting its options?

A trigger strategy

One interesting feature of a prisoner's dilemma game is that

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 14: Game Theory

A player can choose among three strategies: T, M, and B. Nevertheless, strategy B is dominated by strategy T. This means that

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant. The potential entrant cannot earn a profit if the incumbent

Which of the following constitutes a mixed strategy Nash equilibrium of the Odds and Evens game?

What is an example of the bidder's curse?

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. Which of the following is a Nash equilibrium?

With regard to preventing entry, if identical firms act simultaneously,

If an incumbent threatens to retaliate against entry, but its profits are greater under accommodated entry than under the proposed threat, potential entrants will ignore the threat.

If neither firm has a dominant strategy, a Nash equilibrium cannot exist.

In a two-player simultaneous game where neither player has a dominant strategy,

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, what will happen if the government offers a $30 subsidy to airlines that serve this route?

A dominated strategy

The result that different auction styles in which the good goes to the winner with the highest valuation of the good generate the same amount of revenue is called

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, which one of the following statements is TRUE?

In a non-cooperative, imperfect information, simultaneous-choice, one-period game, a Nash equilibrium

A player can choose among three strategies: L, C, and R. Strategy C is never a best response to the other player strategies. This means that

Collusion is more likely to occur when

In auctions, the winner always pays a price equal to the highest (his)bid.

How can a firm be made better off by limiting its options?

A trigger strategy

One interesting feature of a prisoner's dilemma game is that

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters