Question 1

When can making the first move NOT create an advantage?

Accepted Answer

A) The move is made before other players are aware. 
B) Other players are making concurrent moves. 
C) The move is not viewed as a credible commitment. 
D) Other players are harmed by the move. 
A) The move is made before other players are aware. 
B) Other players are making concurrent moves. 
C) The move is not viewed as a credible commitment. 
D) Other players are harmed by the move.

Question 2

There are two popular hiking trails between the bottom parking lot and the top of a mountain. Both trails are similar in length and difficulty. If Markus and Jarrah want to hike on the less crowded trail, they are facing what type of game?

Accepted Answer

A) a coordination game 
B) an anti-coordination game 
C) a Coase equilibrium game 
D) a single issue game 
A) a coordination game 
B) an anti-coordination game 
C) a Coase equilibrium game 
D) a single issue game

Question 3

How can multiple equilibria be identified, using the check mark method on a payoff table?

Accepted Answer

A) More than one cell has two checks, and those cells represent equilibria. 
B) There is a check in more than one cell, each check indicating an equilibrium. 
C) Multiple cells have no checks, and those cells are the equilibria. 
D) A check is put in a cell if both players have agreed to take that action. 
A) More than one cell has two checks, and those cells represent equilibria. 
B) There is a check in more than one cell, each check indicating an equilibrium. 
C) Multiple cells have no checks, and those cells are the equilibria. 
D) A check is put in a cell if both players have agreed to take that action.

Question 4

What determines whether it is more advantageous to be the first mover or the second mover?

Accepted Answer

A) whether profit or growth is more important to the player 
B) whether the other player is bigger or smaller than the player making the first decision 
C) whether the unique equilibrium benefits everyone 
D) whether commitment or flexibility is more important in the situation 
A) whether profit or growth is more important to the player 
B) whether the other player is bigger or smaller than the player making the first decision 
C) whether the unique equilibrium benefits everyone 
D) whether commitment or flexibility is more important in the situation

Question 5

(Figure: Prisoners' Dilemma for Thelma and Louise) Use Figure: Prisoners' Dilemma for Thelma and Louise. Thelma and Louise are arrested and jailed for bank robbery. Given the payoff matrix in the figure, the BEST response for Thelma is:
​

Accepted Answer

A) to confess. 
B) not to confess. 
C) adapt the same strategy as Louise. 
D) Thelma does not have a best response. 
A) to confess. 
B) not to confess. 
C) adapt the same strategy as Louise. 
D) Thelma does not have a best response.

Question 6

(Table: Nike and Reebok Advertising Game) Use Table: Nike and Reebok Advertising Game. The sneaker industry is dominated by Nike and Reebok, and each firm spends a lot of money on advertising. Suppose each firm is considering a costly television commercial during the World Series. The table shows the payoff matrix of profits that each firm would receive from its advertising decision, given the advertising decision of its rival. The BEST response for Nike would be:
​

Accepted Answer

A) advertise. 
B) does not advertise. 
C) advertise only if Reebok advertises. 
D) do not advertise if Reebok advertises. 
A) advertise. 
B) does not advertise. 
C) advertise only if Reebok advertises. 
D) do not advertise if Reebok advertises.

Question 7

(Figure: Payoff Matrix for Blue Bottle and Opal Ocean) Use Figure: Payoff Matrix for Blue Bottle and Opal Ocean. The figure shows the potential profits of two producers of bottled water. Each has two strategies available to it: a high price and a low price. The BEST response for Opal Ocean is to:
​

Accepted Answer

A) charge a low price. 
B) charge a high price. 
C) adopt the same strategy as Blue Bottle. 
D) Opal Ocean does not have a best response. 
A) charge a low price. 
B) charge a high price. 
C) adopt the same strategy as Blue Bottle. 
D) Opal Ocean does not have a best response.

Exam 18: Game Theory and Strategic Choices

When can making the first move NOT create an advantage?

There are two popular hiking trails between the bottom parking lot and the top of a mountain. Both trails are similar in length and difficulty. If Markus and Jarrah want to hike on the less crowded trail, they are facing what type of game?

How can multiple equilibria be identified, using the check mark method on a payoff table?

What determines whether it is more advantageous to be the first mover or the second mover?

(Figure: Prisoners' Dilemma for Thelma and Louise) Use Figure: Prisoners' Dilemma for Thelma and Louise. Thelma and Louise are arrested and jailed for bank robbery. Given the payoff matrix in the figure, the BEST response for Thelma is: ​

The Core Principles of Economics

Demand: Thinking Like a Buyer

Supply: Thinking Like a Seller

Equilibrium: Where Supply Meets Demand

Elasticity: Measuring Responsiveness

When Governments Intervene in Markets

Welfare and Efficiency

Gains From Trade

International Trade

Externalities and Public Goods

Labor Demand and Supply

Wages, Workers, and Management

Inequality, Social Insurance, and Redistribution

Market Structure and Market Power

Entry, Exit, and Long-Run Profitability

Business Strategy

Sophisticated Pricing Strategies

Decisions Involving Uncertainty

Decisions With Private Information

Sizing up the Economy Using Gdp

Economic Growth

Unemployment

Inflation and Money

Consumption and Saving

Investment

The Financial Sector

International Finance and the Exchange Rate

Business Cycles

IS-MP Analysis: Interest Rates and Output

Phillips Curve

The Fed Model: Linking Interest Rates, Output, and Inflation

Aggregate Demand and Aggregate Supply

Monetary Policy

Government Spending, Taxes, and Fiscal Policy

Appendix: Aggregate Expenditure and the Multiplier

Filters

(Figure: Prisoners' Dilemma for Thelma and Louise) Use Figure: Prisoners' Dilemma for Thelma and Louise. Thelma and Louise are arrested and jailed for bank robbery. Given the payoff matrix in the figure, the BEST response for Thelma is: