Question 1

The Coase theorem asserts that:

Accepted Answer

A)  Government taxation of production is necessary for the socially efficient allocation of productive resources. 
B)  Government should not intervene in the market to promote a socially efficient allocation of productive resources. 
C)  Government should compensate groups harmed by negative externalities by taxing groups that have benefitted by creating negative externalities. 
D)  A socially efficient allocation of productive resources in a market economy is possible provided that private property rights are well defined. 
E)  None of the above. The Coase theorem deals with problems arising from asymmetric information. 
A)  Government taxation of production is necessary for the socially efficient allocation of productive resources. 
B)  Government should not intervene in the market to promote a socially efficient allocation of productive resources. 
C)  Government should compensate groups harmed by negative externalities by taxing groups that have benefitted by creating negative externalities. 
D)  A socially efficient allocation of productive resources in a market economy is possible provided that private property rights are well defined. 
E)  None of the above. The Coase theorem deals with problems arising from asymmetric information.

Question 2

Suppose that the land surrounding a lake is owned by individuals A andB. Both individuals use the lake to earn a living from fishing, where fA and fB represent the total amount of fish extracted from the lake from the two individuals. The benefit from each fish is $50 ! fA !fB. The marginal cost of fishing for each profit-maximizing individual is $20. How many fish will maximize social welfare?

Accepted Answer

A)  10 
B)  15 
C)  20 
D)  25 
E)  30" 
A)  10 
B)  15 
C)  20 
D)  25 
E)  30"

Question 3

Suppose that an industry consists of two firms producing an identical product. The market demand for the combined output of both firms is (QA + QB) = 50 !P. The total cost function of each firm is TCi = 1 + 10Qi, where i = A,B. The Nash equilibrium strategy profile for this game is:

Accepted Answer

A)  {10, 10}. 
B)  {13.33, 13.33} 
C)  {16.67, 16.67}. 
D)  {20, 20}. 
E)  {38, 38}." 
A)  {10, 10}. 
B)  {13.33, 13.33} 
C)  {16.67, 16.67}. 
D)  {20, 20}. 
E)  {38, 38}."

Question 4

An industry consists of two firms producing identical goods. The market demand for the combined output of both firms is (QA + QB) = 500 !0.5P. The total cost function of each firm is TCi = 250 + 50Qi, where i = A,B. Firm A's best-response function is:

Accepted Answer

A)  QA = 250 !0.5QB. 
B)  QA = 250 !0.25QB. 
C)  QA = 50 !0.5QB. 
D)  QA = 100 !0.5QB. 
E)  QA = 100 !0.25QB." 
A)  QA = 250 !0.5QB. 
B)  QA = 250 !0.25QB. 
C)  QA = 50 !0.5QB. 
D)  QA = 100 !0.5QB. 
E)  QA = 100 !0.25QB."

The Coase theorem asserts that:

Suppose that an industry consists of two firms producing an identical product. The market demand for the combined output of both firms is (Q_A + Q_B) = 50 !P. The total cost function of each firm is TC_i = 1 + 10Q_i, where i = A,B. The Nash equilibrium strategy profile for this game is:

An industry consists of two firms producing identical goods. The market demand for the combined output of both firms is (Q_A + Q_B) = 500 !0.5P. The total cost function of each firm is TC_i = 250 + 50Q_i, where i = A,B. Firm A's best-response function is:

Introduction to Game Theory

Noncooperative, One-Time, Static Games

Focal-Point and Evolutionary Equilibria

Infinitely-Repeated, Static Games

Finitely-Repeated, Static Games

Mixing Pure Strategies

Imperfect Competition

Perfect Competition and Monopoly

Strategic Trade Policy

Dynamic Games With Complete

Bargaining

Pure Strategies With Uncertain Payoffs

Torts and Contracts

Auctions

Dynamic Games With Incomplete Information

Filters

Exam 7: Static Games With Continuous Strategies

The Coase theorem asserts that:

Suppose that an industry consists of two firms producing an identical product. The market demand for the combined output of both firms is (QA + QB) = 50 !P. The total cost function of each firm is TCi = 1 + 10Qi, where i = A,B. The Nash equilibrium strategy profile for this game is:

An industry consists of two firms producing identical goods. The market demand for the combined output of both firms is (QA + QB) = 500 !0.5P. The total cost function of each firm is TCi = 250 + 50Qi, where i = A,B. Firm A's best-response function is:

Introduction to Game Theory

Noncooperative, One-Time, Static Games

Focal-Point and Evolutionary Equilibria

Infinitely-Repeated, Static Games

Finitely-Repeated, Static Games

Mixing Pure Strategies

Imperfect Competition

Perfect Competition and Monopoly

Strategic Trade Policy

Dynamic Games With Complete

Bargaining

Pure Strategies With Uncertain Payoffs

Torts and Contracts

Auctions

Dynamic Games With Incomplete Information

Filters

Suppose that an industry consists of two firms producing an identical product. The market demand for the combined output of both firms is (Q_A + Q_B) = 50 !P. The total cost function of each firm is TC_i = 1 + 10Q_i, where i = A,B. The Nash equilibrium strategy profile for this game is:

An industry consists of two firms producing identical goods. The market demand for the combined output of both firms is (Q_A + Q_B) = 500 !0.5P. The total cost function of each firm is TC_i = 250 + 50Q_i, where i = A,B. Firm A's best-response function is: