Question 1

Which game always has two Nash equilibrium outcomes?

Accepted Answer

A)  prisoner's dilemma 
B)  repeated games 
C)  leadership games 
D)  chicken games 
A)  prisoner's dilemma 
B)  repeated games 
C)  leadership games 
D)  chicken games

Question 2

A monopolistically competitive firm is like a perfectly competitive firm in the long run because

Accepted Answer

A)  both firms will earn positive economic profit. 
B)  the demand curve for both firms will be horizontal. 
C)  both firms will earn a normal profit. 
D)  both firms can increase price in order to increase profits. 
A)  both firms will earn positive economic profit. 
B)  the demand curve for both firms will be horizontal. 
C)  both firms will earn a normal profit. 
D)  both firms can increase price in order to increase profits.

Question 3

Trigger strategies are actions taken that are contingent on your opponent's past decisions.

Accepted Answer

A) True 
 B)False

Question 4

If Nintendo lowers the price of its product by $10, Sony responds by lowering the price of its own product by $10. The following month, Nintendo raises the price of its product by $15 and Sony responds by raising the price of its own product by $15. This is an example of what type of game strategy?

Accepted Answer

A)  grim trigger 
B)  trembling hand trigger 
C)  tit-for-tat 
D)  predatory pricing 
A)  grim trigger 
B)  trembling hand trigger 
C)  tit-for-tat 
D)  predatory pricing

Question 5

Corporate espionage tends to be a bigger issue in which market structure?

Accepted Answer

A)  perfect competition 
B)  monopoly 
C)  monopolistic competition 
D)  oligopoly 
A)  perfect competition 
B)  monopoly 
C)  monopolistic competition 
D)  oligopoly

Question 6

All of these are characteristic of monopolistic competition EXCEPT

Accepted Answer

A)  easy entry and exit. 
B)  barriers to entry. 
C)  product differentiation. 
D)  price maker. 
A)  easy entry and exit. 
B)  barriers to entry. 
C)  product differentiation. 
D)  price maker.

Question 7

The following game table shows the payoffs for two competing furniture stores: Sofa House and Couch Factory (Sofa House's payoffs are listed first in each outcome). The Nash equilibrium in this game is _____, and this game is best categorized as a _____.

Accepted Answer

A)  Low, Low = 95, 85; leadership game 
B)  High, Low = 80, 130; leadership game 
C)  High, High = 120, 110; prisoner's dilemma 
D)  Low, Low = 95, 85; prisoner's dilemma 
A)  Low, Low = 95, 85; leadership game 
B)  High, Low = 80, 130; leadership game 
C)  High, High = 120, 110; prisoner's dilemma 
D)  Low, Low = 95, 85; prisoner's dilemma

Question 8

(Table) HH Gregg and Best Buy are competing for sales for their newest high-capacity mobile device battery packs. Each firm has a pricing strategy of either a high price or a low price. Profits for each store are listed in the payoff boxes, with Best Buy's payoff listed first. Based on the table, does either store have a dominant strategy in this game?
$\begin{array}{c}
\quad \quad \quad \quad \quad \quad \quad \quad \text { HH Gregg }\
\begin{array}{ccc} 
\text { Best Buy }\
&& \text { High } & \text { Low } \
&\text { High } & 100,100 & 30,120 \
&\text { Low } & 120,30 & 50,50
\end{array}\end{array}$

Accepted Answer

A)  Best Buy has a dominant strategy, but HH Gregg does not. 
B)  HH Gregg has a dominant strategy, but Best Buy does not. 
C)  Both stores have a dominant strategy. 
D)  Neither store has a dominant strategy. 
A)  Best Buy has a dominant strategy, but HH Gregg does not. 
B)  HH Gregg has a dominant strategy, but Best Buy does not. 
C)  Both stores have a dominant strategy. 
D)  Neither store has a dominant strategy.

Question 9

In a cartel

Accepted Answer

A)  firms act independently from one another. 
B)  members charge different prices. 
C)  firms collude to maximize their joint profits. 
D)  firms behave as a monopolistically competitive market. 
A)  firms act independently from one another. 
B)  members charge different prices. 
C)  firms collude to maximize their joint profits. 
D)  firms behave as a monopolistically competitive market.

Question 10

An oligopoly is a market structure characterized as having one large seller.

Accepted Answer

A) True 
 B)False

Question 11

Describe short-run pricing and output decisions for monopolistically competitive firms. To support your explanation, provide a graph for a monopolistically competitive firm that makes a profit in the short run. How does a monopolistically competitive firm compare with a monopoly?

Accepted Answer

For the monopolistically competitive fir

Question 12

The "dilemma" in a prisoner's dilemma refers to the fact that

Accepted Answer

A)  only one of the players is able to achieve their highest payoff in a Nash equilibrium. 
B)  both players would be better off by cooperating, but not cooperating is a dominant strategy. 
C)  both players would be better off by not cooperating, but cooperating is a dominant strategy. 
D)  the player that moves first always gets the worst outcome. 
A)  only one of the players is able to achieve their highest payoff in a Nash equilibrium. 
B)  both players would be better off by cooperating, but not cooperating is a dominant strategy. 
C)  both players would be better off by not cooperating, but cooperating is a dominant strategy. 
D)  the player that moves first always gets the worst outcome.

Question 13

If this monopolistically competitive firm maximizes profits in the short run, it must price its good at

Accepted Answer

A)  $3. 
B)  $4. 
C)  $7. 
D)  $10. 
A)  $3. 
B)  $4. 
C)  $7. 
D)  $10.

Question 14

Game theory is

Accepted Answer

A)  the study of strategy and strategic behavior. 
B)  focused on competition between two distinct rivals. 
C)  a methodology to accomplish winning results in games of chance. 
D)  a strategy that requires cooperation when multiple parties are involved. 
A)  the study of strategy and strategic behavior. 
B)  focused on competition between two distinct rivals. 
C)  a methodology to accomplish winning results in games of chance. 
D)  a strategy that requires cooperation when multiple parties are involved.

Question 15

Advertising has the potential to bring about economies of scale.

Accepted Answer

A) True 
 B)False

Question 16

If a player chooses not to forgive another player who cheats on an agreement, which trigger strategy is MORE likely to be used?

Accepted Answer

A)  tit-for-tat 
B)  grim trigger 
C)  dominant 
D)  trembling hand trigger 
A)  tit-for-tat 
B)  grim trigger 
C)  dominant 
D)  trembling hand trigger

Question 17

The market for air travel from Dallas to Chicago is

Accepted Answer

A)  a monopoly. 
B)  an oligopoly. 
C)  monopolistically competitive. 
D)  competitive. 
A)  a monopoly. 
B)  an oligopoly. 
C)  monopolistically competitive. 
D)  competitive.

Question 18

_____ is a noncooperative game in which players cannot communicate or collaborate in making their decision about whether to confess.

Accepted Answer

A)  Tit-for-tat 
B)  The prisoner's dilemma 
C)  Grim trigger 
D)  Trembling hand trigger 
A)  Tit-for-tat 
B)  The prisoner's dilemma 
C)  Grim trigger 
D)  Trembling hand trigger

Question 19

Oligopolies operate with mutual interdependence when their actions take into account the behavior of their competitors.

Accepted Answer

A) True 
 B)False

Question 20

A game in which players do not negotiate and do not work together is a _____ game.

Accepted Answer

A)  noncooperative 
B)  zero-sum 
C)  cooperative 
D)  negative-sum 
A)  noncooperative 
B)  zero-sum 
C)  cooperative 
D)  negative-sum

Which game always has two Nash equilibrium outcomes?

A monopolistically competitive firm is like a perfectly competitive firm in the long run because

Trigger strategies are actions taken that are contingent on your opponent's past decisions.

If Nintendo lowers the price of its product by $10, Sony responds by lowering the price of its own product by $10. The following month, Nintendo raises the price of its product by $15 and Sony responds by raising the price of its own product by $15. This is an example of what type of game strategy?

Corporate espionage tends to be a bigger issue in which market structure?

All of these are characteristic of monopolistic competition EXCEPT

The following game table shows the payoffs for two competing furniture stores: Sofa House and Couch Factory (Sofa House's payoffs are listed first in each outcome). The Nash equilibrium in this game is _, and this game is best categorized as a _.

In a cartel

An oligopoly is a market structure characterized as having one large seller.

Describe short-run pricing and output decisions for monopolistically competitive firms. To support your explanation, provide a graph for a monopolistically competitive firm that makes a profit in the short run. How does a monopolistically competitive firm compare with a monopoly?

The "dilemma" in a prisoner's dilemma refers to the fact that

If this monopolistically competitive firm maximizes profits in the short run, it must price its good at

Game theory is

Advertising has the potential to bring about economies of scale.

If a player chooses not to forgive another player who cheats on an agreement, which trigger strategy is MORE likely to be used?

The market for air travel from Dallas to Chicago is

_____ is a noncooperative game in which players cannot communicate or collaborate in making their decision about whether to confess.

Oligopolies operate with mutual interdependence when their actions take into account the behavior of their competitors.

A game in which players do not negotiate and do not work together is a _____ game.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Elasticity

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopoly

The Labor Market

Land, Capital Markets, and Innovation

Externalities and Public Goods

Network Goods

Poverty and Income Distribution

International Trade

Filters

Exam 10: Monopolistic Competition, Oligopoly, and Game Theory

Which game always has two Nash equilibrium outcomes?

A monopolistically competitive firm is like a perfectly competitive firm in the long run because

Trigger strategies are actions taken that are contingent on your opponent's past decisions.

If Nintendo lowers the price of its product by $10, Sony responds by lowering the price of its own product by $10. The following month, Nintendo raises the price of its product by $15 and Sony responds by raising the price of its own product by $15. This is an example of what type of game strategy?

Corporate espionage tends to be a bigger issue in which market structure?

All of these are characteristic of monopolistic competition EXCEPT

The following game table shows the payoffs for two competing furniture stores: Sofa House and Couch Factory (Sofa House's payoffs are listed first in each outcome). The Nash equilibrium in this game is _____, and this game is best categorized as a _____.

In a cartel

An oligopoly is a market structure characterized as having one large seller.

Describe short-run pricing and output decisions for monopolistically competitive firms. To support your explanation, provide a graph for a monopolistically competitive firm that makes a profit in the short run. How does a monopolistically competitive firm compare with a monopoly?

The "dilemma" in a prisoner's dilemma refers to the fact that

If this monopolistically competitive firm maximizes profits in the short run, it must price its good at

Game theory is

Advertising has the potential to bring about economies of scale.

If a player chooses not to forgive another player who cheats on an agreement, which trigger strategy is MORE likely to be used?

The market for air travel from Dallas to Chicago is

_____ is a noncooperative game in which players cannot communicate or collaborate in making their decision about whether to confess.

Oligopolies operate with mutual interdependence when their actions take into account the behavior of their competitors.

A game in which players do not negotiate and do not work together is a _____ game.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Elasticity

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopoly

The Labor Market

Land, Capital Markets, and Innovation

Externalities and Public Goods

Network Goods

Poverty and Income Distribution

International Trade

Filters

The following game table shows the payoffs for two competing furniture stores: Sofa House and Couch Factory (Sofa House's payoffs are listed first in each outcome). The Nash equilibrium in this game is _, and this game is best categorized as a _.