Question 1

A mixed strategy may

Accepted Answer

A) be part of a Nash equilibrium. 
B) be a set of probabilities of selecting each possible action. 
C) lead identical firms to choose different actions. 
D) All of the above. 
A) be part of a Nash equilibrium. 
B) be a set of probabilities of selecting each possible action. 
C) lead identical firms to choose different actions. 
D) All of the above.

Question 2

If an incumbent cannot commit and faces an identical potential entrant with relatively high fixed costs that are below the level where entry is blockaded, the incumbent will

Accepted Answer

A) produce the Cournot duopolist level of output. 
B) produce the Stackelberg leader level of output. 
C) set price equal to marginal cost. 
D) produce a level of output that is greater than the Stackelberg leader level of output. 
A) produce the Cournot duopolist level of output. 
B) produce the Stackelberg leader level of output. 
C) set price equal to marginal cost. 
D) produce a level of output that is greater than the Stackelberg leader level of output.

Question 3

Suppose market demand is p = 10 - Q. Firms incur no cost of production. If firm A is the incumbent, can it deter the entry of its rival, firm B?

Accepted Answer

Firm B's reaction function is q_B = 5 - (1

Question 4

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant. Assuming a fixed cost of entry, the incumbent will deter entry because

Accepted Answer

A) it is more profitable than accommodating entry. 
B) it increases consumer surplus. 
C) the potential entrant winds up with zero profit. 
D) the incumbent would earn zero profit if it accommodated entry. 
A) it is more profitable than accommodating entry. 
B) it increases consumer surplus. 
C) the potential entrant winds up with zero profit. 
D) the incumbent would earn zero profit if it accommodated entry.

Question 5

A strategy is dominant if

Accepted Answer

A) it yields a greater payoff than any other player receives. 
B) it yields a payoff at least as large as that from any other strategy, regardless of the actions of other players. 
C) the player cannot gain by changing strategy, assuming that no other player changes strategy. 
D) it is part of a Nash equilibrium. 
A) it yields a greater payoff than any other player receives. 
B) it yields a payoff at least as large as that from any other strategy, regardless of the actions of other players. 
C) the player cannot gain by changing strategy, assuming that no other player changes strategy. 
D) it is part of a Nash equilibrium.

Question 6

Which auctioned good is more likely to have different private values across potential bidders?

Accepted Answer

A) a truckload of sand 
B) a Monet painting 
C) a brand new car 
D) a gold bar 
A) a truckload of sand 
B) a Monet painting 
C) a brand new car 
D) a gold bar

Question 7

If the payoff to the United States to pursuing nuclear weapons is 100 if the USSR does not pursue nuclear weapons and 50 if they do, and the payoff to the USSR to pursuing nuclear weapons is 80 if the USA doesn't pursue nuclear weapons and 30 if they do, what is the non-cooperative equilibrium?

Accepted Answer

A) The USA pursues nuclear weapons, the USSR does not. 
B) The USA pursues nuclear weapons, the USSR pursues nuclear weapons. 
C) The USA does not pursue nuclear weapons, the USSR does not pursue nuclear weapons. 
D) The USA does not pursue nuclear weapons, the USSR does pursue nuclear weapons. 
A) The USA pursues nuclear weapons, the USSR does not. 
B) The USA pursues nuclear weapons, the USSR pursues nuclear weapons. 
C) The USA does not pursue nuclear weapons, the USSR does not pursue nuclear weapons. 
D) The USA does not pursue nuclear weapons, the USSR does pursue nuclear weapons.

Question 8

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. For firm B,

Accepted Answer

A) setting a high price is the dominant strategy. 
B) setting a low price is the dominant strategy. 
C) there is no dominant strategy. 
D) doing the opposite of firm A is always the best strategy. 
A) setting a high price is the dominant strategy. 
B) setting a low price is the dominant strategy. 
C) there is no dominant strategy. 
D) doing the opposite of firm A is always the best strategy.

Question 9

Why is collusion more likely in a repeated game?

Accepted Answer

First, a firm can signal other firms tha

Question 10

If an incumbent faces an identical potential entrant with no costs of entry, the incumbent will

Accepted Answer

A) produce the Cournot duopolist level of output. 
B) produce the Stackelberg leader level of output. 
C) set price equal to marginal cost. 
D) shut down. 
A) produce the Cournot duopolist level of output. 
B) produce the Stackelberg leader level of output. 
C) set price equal to marginal cost. 
D) shut down.

Question 11

An auction in which the price announced by the auctioneer DESCENDS is called a(n)

Accepted Answer

A) Dutch Auction. 
B) English Auction. 
C) Sealed Bid Auction. 
D) Descending Option Auction. 
A) Dutch Auction. 
B) English Auction. 
C) Sealed Bid Auction. 
D) Descending Option Auction.

Question 12

Which of the following is LEAST likely characterized by mixed strategies?

Accepted Answer

A) the choice of whether to go to war or not 
B) the choice of which pitch to throw in baseball 
C) the choice of which play to run in football 
D) the choice of where to kick a soccer penalty shot 
A) the choice of whether to go to war or not 
B) the choice of which pitch to throw in baseball 
C) the choice of which play to run in football 
D) the choice of where to kick a soccer penalty shot

Question 13

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. The Nash equilibrium in this game

Accepted Answer

A) does not exist. 
B) occurs when both firms set a low price. 
C) occurs when both firms set a high price. 
D) occurs when firm A sets a high price and firm B sets a low price. 
A) does not exist. 
B) occurs when both firms set a low price. 
C) occurs when both firms set a high price. 
D) occurs when firm A sets a high price and firm B sets a low price.

Question 14

Which of the following is NOT part of solving a game?

Accepted Answer

A) Write down all possible combinations of strategies. 
B) Write down all possible payoffs and eliminate dominated strategies. 
C) Solve for any Nash Equilibrium. 
D) None of the above. 
A) Write down all possible combinations of strategies. 
B) Write down all possible payoffs and eliminate dominated strategies. 
C) Solve for any Nash Equilibrium. 
D) None of the above.

Question 15

Assume a firm lowers price below marginal cost to deter entry.

Accepted Answer

A) This strategy is not credible. 
B) This strategy is credible. 
C) This strategy is illegal. 
D) This strategy is immoral. 
A) This strategy is not credible. 
B) This strategy is credible. 
C) This strategy is illegal. 
D) This strategy is immoral.

Question 16

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. How many Nash equilibria are there?

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 4 
A) 0 
B) 1 
C) 2 
D) 4

Question 17

Mutually Assured Destruction was a standing policy during the Cold War, in which the United States and the U.S.S.R. maintained and expanded nuclear arsenals beyond practical levels. What could explain such a phenomenon?

Accepted Answer

A) insane public officials who were bent on world domination 
B) a prisoners' dilemma 
C) a leader-follower type game 
D) tacit collusion 
A) insane public officials who were bent on world domination 
B) a prisoners' dilemma 
C) a leader-follower type game 
D) tacit collusion

Question 18

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, how many pure Nash equilibria are there?

Accepted Answer

A) 0 
B) 1 
C) 2 
D) It cannot be determined. 
A) 0 
B) 1 
C) 2 
D) It cannot be determined.

Question 19

Which of the following is a dynamic game?

Accepted Answer

A) rock-paper-scissors 
B) flipping pennies 
C) chess 
D) the card game "war" 
A) rock-paper-scissors 
B) flipping pennies 
C) chess 
D) the card game "war"

Question 20

-The game rock-paper-scissors has

Accepted Answer

A) a mixed strategy equilibrium. 
B) a dominant strategy equilibrium. 
C) no equilibrium. 
D) a pure strategy equilibrium. 
A) a mixed strategy equilibrium. 
B) a dominant strategy equilibrium. 
C) no equilibrium. 
D) a pure strategy equilibrium.

A mixed strategy may

If an incumbent cannot commit and faces an identical potential entrant with relatively high fixed costs that are below the level where entry is blockaded, the incumbent will

Suppose market demand is p = 10 - Q. Firms incur no cost of production. If firm A is the incumbent, can it deter the entry of its rival, firm B?

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant. Assuming a fixed cost of entry, the incumbent will deter entry because

A strategy is dominant if

Which auctioned good is more likely to have different private values across potential bidders?

If the payoff to the United States to pursuing nuclear weapons is 100 if the USSR does not pursue nuclear weapons and 50 if they do, and the payoff to the USSR to pursuing nuclear weapons is 80 if the USA doesn't pursue nuclear weapons and 30 if they do, what is the non-cooperative equilibrium?

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. For firm B,

Why is collusion more likely in a repeated game?

If an incumbent faces an identical potential entrant with no costs of entry, the incumbent will

An auction in which the price announced by the auctioneer DESCENDS is called a(n)

Which of the following is LEAST likely characterized by mixed strategies?

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. The Nash equilibrium in this game

Which of the following is NOT part of solving a game?

Assume a firm lowers price below marginal cost to deter entry.

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. How many Nash equilibria are there?

Mutually Assured Destruction was a standing policy during the Cold War, in which the United States and the U.S.S.R. maintained and expanded nuclear arsenals beyond practical levels. What could explain such a phenomenon?

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, how many pure Nash equilibria are there?

Which of the following is a dynamic game?

-The game rock-paper-scissors has

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 mixed strategy may

If an incumbent cannot commit and faces an identical potential entrant with relatively high fixed costs that are below the level where entry is blockaded, the incumbent will

Suppose market demand is p = 10 - Q. Firms incur no cost of production. If firm A is the incumbent, can it deter the entry of its rival, firm B?

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant. Assuming a fixed cost of entry, the incumbent will deter entry because

A strategy is dominant if

Which auctioned good is more likely to have different private values across potential bidders?

If the payoff to the United States to pursuing nuclear weapons is 100 if the USSR does not pursue nuclear weapons and 50 if they do, and the payoff to the USSR to pursuing nuclear weapons is 80 if the USA doesn't pursue nuclear weapons and 30 if they do, what is the non-cooperative equilibrium?

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. For firm B,

Why is collusion more likely in a repeated game?

If an incumbent faces an identical potential entrant with no costs of entry, the incumbent will

An auction in which the price announced by the auctioneer DESCENDS is called a(n)

Which of the following is LEAST likely characterized by mixed strategies?

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. The Nash equilibrium in this game

Which of the following is NOT part of solving a game?

Assume a firm lowers price below marginal cost to deter entry.

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. How many Nash equilibria are there?

Mutually Assured Destruction was a standing policy during the Cold War, in which the United States and the U.S.S.R. maintained and expanded nuclear arsenals beyond practical levels. What could explain such a phenomenon?

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, how many pure Nash equilibria are there?

Which of the following is a dynamic game?

-The game rock-paper-scissors has

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