Question 1

-Which of the following are Nash equilibrium payoffs in the one-shot game?

Accepted Answer

A) (0, 0). 
B) (5, -5). 
C) (-5, 5). 
D) (10, 10). 
A) (0, 0). 
B) (5, -5). 
C) (-5, 5). 
D) (10, 10).

Question 2

Which of the following is true?

Accepted Answer

A) A Nash equilibrium is always perfect. 
B) A perfect equilibrium is always Nash. 
C) A Nash equilibrium is always perfect in a multistage game. 
D) Perfect equilibrium and Nash equilibrium are the same concept but with different names. 
A) A Nash equilibrium is always perfect. 
B) A perfect equilibrium is always Nash. 
C) A Nash equilibrium is always perfect in a multistage game. 
D) Perfect equilibrium and Nash equilibrium are the same concept but with different names.

Question 3

-Suppose the game is infinitely repeated.Then the "best" the firms could do in a Nash equilibrium is to earn ___ per period.

Accepted Answer

A) (0, 0) 
B) (5, -5) 
C) (-5, 5) 
D) (10, 10) 
A) (0, 0) 
B) (5, -5) 
C) (-5, 5) 
D) (10, 10)

Question 4

Consider the following innovation game.Firm A must decide whether or not to introduce a new product.Firm B must decide whether or not to clone firm A's product.If firm A introduces and B clones, then firm A earns $1 and B earns $10.If A introduces and B does not clone, then A earns $10 and B earns $2.If firm A does not introduce, both firms earn profits of 0.Which of the following is true.

Accepted Answer

A) The subgame perfect Nash equilibrium profits are ($10,2). 
B) It is not in A's interest to introduce. 
C) Firm A does not care if B clones. 
D) None of the statements associated with this question are correct. 
A) The subgame perfect Nash equilibrium profits are ($10,2). 
B) It is not in A's interest to introduce. 
C) Firm A does not care if B clones. 
D) None of the statements associated with this question are correct.

Question 5

You are the manager of a firm that is "bargaining" with another firm over how much to pay for a key input your firm uses in production.Which type of bargaining would be "better" from your firm's point of view, simultaneous-move bargaining or take-it-over-leave-it bargaining? Explain carefully.

Accepted Answer

Sequential, take-it or leave-it bargaini

Question 6

You operate in a duopoly in which you and a rival must simultaneously decide what price to advertise in the weekly newspaper.If you each charge a low price, you each earn zero profits.If you each charge a high price, you each earn profits of $3.If you charge different prices, the one charging the higher price loses $5 and the one charging the lower price makes $5.
a.Find the Nash equilibrium for a one-shot version of this game.
b.Now suppose the game is infinitely repeated.If the interest rate is 10 percent, can you do better than you could in a one-shot play of the game? Explain.
c.Explain how "history" affects the ability of firms in this game to achieve an outcome superior to that of the one-shot version of the game.

Accepted Answer

a.Both players charging low prices is a

Question 7

A coordination problem arises whenever there:

Accepted Answer

A) is no Nash equilibrium in a game. 
B) is a unique Nash equilibrium but it is not very desirable. 
C) are multiple Nash equilibria. 
D) are no dominant strategies for both players. 
A) is no Nash equilibrium in a game. 
B) is a unique Nash equilibrium but it is not very desirable. 
C) are multiple Nash equilibria. 
D) are no dominant strategies for both players.

Question 8

Which of the following represents Firm A's full strategy space?

Accepted Answer

A) {A, C}. 
B) {A, B}. 
C) {(A, 
C) , (A, 
D) , (B, 
C) , (B, 
D) }. 
D) {C, D}. 
A) {A, C}. 
B) {A, B}. 
C) {(A, 
C) , (A, 
D) , (B, 
C) , (B, 
D) }. 
D) {C, D}.

Question 9

Which of the following is not an important determinant of collusion in pricing games?

Accepted Answer

A) The number of firms in the industry. 
B) The punishment mechanisms that are in place. 
C) The history of the particular market. 
D) None of the statements associated with this question are correct. 
A) The number of firms in the industry. 
B) The punishment mechanisms that are in place. 
C) The history of the particular market. 
D) None of the statements associated with this question are correct.

Question 10

Consider the following information for a simultaneous move game: If you advertise and your rival advertises, you each will earn $5 million in profits.If neither of you advertise, you will each earn $10 million in profits.However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the non advertising firm will earn $1 million.If you and your rival plan to be in business for 10 years, then the Nash equilibrium is

Accepted Answer

A) For each firm to advertise every year. 
B) For neither firm to advertise in early years, but to advertise in later years. 
C) For each firm to not advertise in any year. 
D) For each firm to advertise in early years, but not advertise in later years. 
A) For each firm to advertise every year. 
B) For neither firm to advertise in early years, but to advertise in later years. 
C) For each firm to not advertise in any year. 
D) For each firm to advertise in early years, but not advertise in later years.

Question 11

Two firms produce identical products at zero cost, and they compete by setting prices.If each firm charges a low price, the both firms earn profits of zero.If each firm charges a high price, then each firm earns profits of $30.if one firm charges a high price and the other firm charges a low price, the firm that charges the lowest price earns profits of $50 and the firm charging the highest price earns profits of zero.
a.Which oligopoly model best describes this situation?
b.Write this game in normal form.
c.Suppose the game is infinitely repeated.Can the players sustain the "collusive outcome" as a Nash equilibrium if the interest rate if 50 percent? Explain.

Accepted Answer

a.The Bertrand model (Cournot and Stacke

Question 12

What are the pure Nash equilibrium strategies for this game?

Accepted Answer

A) {(B, 
C) }. 
B) {(A, 
C)  and (B, 
D) }. 
C) {(A, 
C) }. 
D) there is no pure strategy Nash equilibrium to this game. 
A) {(B, 
C) }. 
B) {(A, 
C)  and (B, 
D) }. 
C) {(A, 
C) }. 
D) there is no pure strategy Nash equilibrium to this game.

Question 13

Use the following information to answer question:
Suppose that you are a manager.You are considering whether or not to monitor employees with the payoffs in the following normal form game.  
-Management and a labor union are bargaining over how much of a $50 surplus to give to the union.The $50 is divisible up to one cent.The players have one-shot to reach an agreement.Management has the ability to announce what it wants first, and then the labor union can accept or reject the offer.Both players get zero if the total amounts asked for exceed $50.Which of the following is not a Nash equilibrium?

Accepted Answer

A) Management requests $50 and the labor union accepts $0. 
B) Management requests $30 and the labor union accepts $10. 
C) Management requests $25 and the labor union accepts $25. 
D) Neither management requesting $50 and the labor union accepting $0 nor management requesting $30 and the labor union accepting $10 are Nash equilibria. 
A) Management requests $50 and the labor union accepts $0. 
B) Management requests $30 and the labor union accepts $10. 
C) Management requests $25 and the labor union accepts $25. 
D) Neither management requesting $50 and the labor union accepting $0 nor management requesting $30 and the labor union accepting $10 are Nash equilibria.

Question 14

Which of the following is true?

Accepted Answer

A) A dominant strategy for Firm A is "high price". 
B) There does not exist a dominant strategy for Firm A. 
C) A dominant strategy for Firm B is "low price". 
D) none of the statements associated with this question are correct. 
A) A dominant strategy for Firm A is "high price". 
B) There does not exist a dominant strategy for Firm A. 
C) A dominant strategy for Firm B is "low price". 
D) none of the statements associated with this question are correct.

-Which of the following are Nash equilibrium payoffs in the one-shot game?

Which of the following is true?

-Suppose the game is infinitely repeated.Then the "best" the firms could do in a Nash equilibrium is to earn ___ per period.

You are the manager of a firm that is "bargaining" with another firm over how much to pay for a key input your firm uses in production.Which type of bargaining would be "better" from your firm's point of view, simultaneous-move bargaining or take-it-over-leave-it bargaining? Explain carefully.

A coordination problem arises whenever there:

Which of the following represents Firm A's full strategy space?

Which of the following is not an important determinant of collusion in pricing games?

What are the pure Nash equilibrium strategies for this game?

Which of the following is true?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

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Exam 10: Game Theory: Inside Oligopoly

-Which of the following are Nash equilibrium payoffs in the one-shot game?

Which of the following is true?

-Suppose the game is infinitely repeated.Then the "best" the firms could do in a Nash equilibrium is to earn ___ per period.

You are the manager of a firm that is "bargaining" with another firm over how much to pay for a key input your firm uses in production.Which type of bargaining would be "better" from your firm's point of view, simultaneous-move bargaining or take-it-over-leave-it bargaining? Explain carefully.

A coordination problem arises whenever there:

Which of the following represents Firm A's full strategy space?

Which of the following is not an important determinant of collusion in pricing games?

What are the pure Nash equilibrium strategies for this game?

Which of the following is true?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters