Question 1

If there are low barriers to entry,a monopolist

Accepted Answer

A)  might undertake investment to lower marginal cost in the face of a potential rival. 
B)  will undertake investment to lower marginal cost in order to increase profits. 
C)  will not undertake investment to lower marginal cost under any circumstances because profits are lower. 
D)  Both A and B. 
A)  might undertake investment to lower marginal cost in the face of a potential rival. 
B)  will undertake investment to lower marginal cost in order to increase profits. 
C)  will not undertake investment to lower marginal cost under any circumstances because profits are lower. 
D)  Both A and B. A

Question 2

Behavioral game theory assumes

Accepted Answer

A)  people act rationally. 
B)  people have limited calculation capability or psychological biases that cause them to act irrationally. 
C)  that people behave differently when playing games than when "playing for real." 
D)  people overcome their psychological biases. 
A)  people act rationally. 
B)  people have limited calculation capability or psychological biases that cause them to act irrationally. 
C)  that people behave differently when playing games than when "playing for real." 
D)  people overcome their psychological biases. B

Question 3

In an ultimatum game

Accepted Answer

A)  non-profit-maximizing behavior often occurs. 
B)  players move simultaneously. 
C)  players act in an economically rational way. 
D)  one player receives nothing. 
A)  non-profit-maximizing behavior often occurs. 
B)  players move simultaneously. 
C)  players act in an economically rational way. 
D)  one player receives nothing. A

Question 4

Which of the following is a dynamic game?

Accepted Answer

A)  rock-paper-scissors 
B)  Flipping pennies 
C)  chess 
D)  None of the above. 
A)  rock-paper-scissors 
B)  Flipping pennies 
C)  chess 
D)  None of the above.

Question 5

Which of the following is a sequential game?

Accepted Answer

A)  rock-paper-scissors 
B)  paintball 
C)  Monopoly 
D)  boxing 
A)  rock-paper-scissors 
B)  paintball 
C)  Monopoly 
D)  boxing

Question 6

Dynamic and static games have outcomes that

Accepted Answer

A)  may be different. 
B)  are always different. 
C)  are not Nash equilibria. 
D)  result from dominant strategies. 
A)  may be different. 
B)  are always different. 
C)  are not Nash equilibria. 
D)  result from dominant strategies.

Question 7

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

Accepted Answer

A)  deters entry. 
B)  chooses the Stackelberg leader level of output but the potential entrant does not enter anyway. 
C)  chooses the Stackelberg leader level of output and the potential entrant enters. 
D)  deters entry and earns zero profit. 
A)  deters entry. 
B)  chooses the Stackelberg leader level of output but the potential entrant does not enter anyway. 
C)  chooses the Stackelberg leader level of output and the potential entrant enters. 
D)  deters entry and earns zero profit.

Question 8

Deterring entry might require a firm to

Accepted Answer

A)  price their product closer to the competitive price than to the monopoly price. 
B)  price their product closer to the monopoly price than to the competitive price. 
C)  dropping output almost to zero to show the consumers "who's boss." 
D)  dropping price almost to zero to get price below marginal cost. 
A)  price their product closer to the competitive price than to the monopoly price. 
B)  price their product closer to the monopoly price than to the competitive price. 
C)  dropping output almost to zero to show the consumers "who's boss." 
D)  dropping price almost to zero to get price below marginal cost.

Question 9

A sub-game perfect Nash equilibrium is defined as

Accepted Answer

A)  a set of strategies that are a Nash equilibrium in every subgame of a static game. 
B)  a set of strategies that are a Nash equilibrium in every subgame of a dynamic game. 
C)  a set of strategies that are a Nash equilibrium in a single subgame of a dynamic game. 
D)  the game within the game. 
A)  a set of strategies that are a Nash equilibrium in every subgame of a static game. 
B)  a set of strategies that are a Nash equilibrium in every subgame of a dynamic game. 
C)  a set of strategies that are a Nash equilibrium in a single subgame of a dynamic game. 
D)  the game within the game.

Question 10

A disadvantage of moving too quickly is that

Accepted Answer

A)  costs of entry are higher. 
B)  consumers aren't loyal. 
C)  firms are subject to holdup problems. 
D)  All of the above. 
A)  costs of entry are higher. 
B)  consumers aren't loyal. 
C)  firms are subject to holdup problems. 
D)  All of the above.

Question 11

In a dynamic game,rational players

Accepted Answer

A)  will reject outcomes that are not subgame perfect. 
B)  use backward induction to determine best responses. 
C)  have strategies that select a Nash equilibrium in the game as a whole. 
D)  All of the above. 
A)  will reject outcomes that are not subgame perfect. 
B)  use backward induction to determine best responses. 
C)  have strategies that select a Nash equilibrium in the game as a whole. 
D)  All of the above.

Question 12

In the mini-case on pay-for-delay

Accepted Answer

A)  incumbents are attempting to delay entry of generic drugs. 
B)  the deals incumbents made with potential entrants may be illegal. 
C)  the deals are only profitable for approximately six months. 
D)  All of the above. 
A)  incumbents are attempting to delay entry of generic drugs. 
B)  the deals incumbents made with potential entrants may be illegal. 
C)  the deals are only profitable for approximately six months. 
D)  All of the above.

Question 13

Repeated games are conducive to

Accepted Answer

A)  explicit cooperation. 
B)  tacit cooperation. 
C)  corruption. 
D)  failing to have a Nash equilibrium. 
A)  explicit cooperation. 
B)  tacit cooperation. 
C)  corruption. 
D)  failing to have a Nash equilibrium.

Question 14

A holdup problem occurs

Accepted Answer

A)  when a financial institution undertakes too little investment in security. 
B)  when one firm must make a specific investment and a second firm takes advantage of it. 
C)  if the firm that moves second in a Stackelberg game chooses the incorrect output level. 
D)  if you are entering into a contract with a government entity. 
A)  when a financial institution undertakes too little investment in security. 
B)  when one firm must make a specific investment and a second firm takes advantage of it. 
C)  if the firm that moves second in a Stackelberg game chooses the incorrect output level. 
D)  if you are entering into a contract with a government entity.

Question 15

In a Stackelberg game,a monopolist could deter entry from a potential rival by

Accepted Answer

A)  telling the potential rival not to enter. 
B)  strategically moving first. 
C)  moving to a Bertrand model. 
D)  None of the above. 
A)  telling the potential rival not to enter. 
B)  strategically moving first. 
C)  moving to a Bertrand model. 
D)  None of the above.

Question 16

If a monopolist faces entry by a potential rival,investing to lower its marginal cost

Accepted Answer

A)  is a credible way to deter entry. 
B)  is not a credible threat. 
C)  is credible but will not deter entry. 
D)  will not occur, even when there are no barriers to entry. 
A)  is a credible way to deter entry. 
B)  is not a credible threat. 
C)  is credible but will not deter entry. 
D)  will not occur, even when there are no barriers to entry.

Question 17

In a finitely repeated prisoners' dilemma game

Accepted Answer

A)  firms will only cooperate if they each adopt a tit-for-tat strategy. 
B)  firms cooperate and achieve the collusive Nash equilibrium for all rounds. 
C)  firms cooperate for most of the rounds, but switch to the non-cooperative outcome in the final couple of rounds. 
D)  firms do not cooperate and the static game Nash equilibrium is the outcome for each round. 
A)  firms will only cooperate if they each adopt a tit-for-tat strategy. 
B)  firms cooperate and achieve the collusive Nash equilibrium for all rounds. 
C)  firms cooperate for most of the rounds, but switch to the non-cooperative outcome in the final couple of rounds. 
D)  firms do not cooperate and the static game Nash equilibrium is the outcome for each round.

Question 18

In the ultimatum game,one reason players don't choose the rational offer is

Accepted Answer

A)  that there are too many possible outcomes to reasonably consider. 
B)  they are worse off by taking the offer. 
C)  they prefer to sacrifice to punish "unfair" behavior. 
D)  that it is not a Nash equilibrium. 
A)  that there are too many possible outcomes to reasonably consider. 
B)  they are worse off by taking the offer. 
C)  they prefer to sacrifice to punish "unfair" behavior. 
D)  that it is not a Nash equilibrium.

Question 19

In a tit-for-tat strategy,a player

Accepted Answer

A)  randomly punishes its rival. 
B)  ensures that the joint profit is maximized in each round. 
C)  copies the action of its rival's prior move in the subsequent rounds. 
D)  maximizes the joint profit in the game. 
A)  randomly punishes its rival. 
B)  ensures that the joint profit is maximized in each round. 
C)  copies the action of its rival's prior move in the subsequent rounds. 
D)  maximizes the joint profit in the game.

Question 20

The Cournot and Stackelberg models are similar,except Cournot ________ and Stackelberg ________.

Accepted Answer

A)  sets price; sets output 
B)  sets output; sets price 
C)  is dynamic; is static 
D)  is static; is dynamic 
A)  sets price; sets output 
B)  sets output; sets price 
C)  is dynamic; is static 
D)  is static; is dynamic

If there are low barriers to entry,a monopolist

Behavioral game theory assumes

In an ultimatum game

Which of the following is a dynamic game?

Which of the following is a sequential game?

Dynamic and static games have outcomes that

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

Deterring entry might require a firm to

A sub-game perfect Nash equilibrium is defined as

A disadvantage of moving too quickly is that

In a dynamic game,rational players

In the mini-case on pay-for-delay

Repeated games are conducive to

A holdup problem occurs

In a Stackelberg game,a monopolist could deter entry from a potential rival by

If a monopolist faces entry by a potential rival,investing to lower its marginal cost

In a finitely repeated prisoners' dilemma game

In the ultimatum game,one reason players don't choose the rational offer is

In a tit-for-tat strategy,a player

The Cournot and Stackelberg models are similar,except Cournot and Stackelberg .

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 13: Strategies Over Time

If there are low barriers to entry,a monopolist

Behavioral game theory assumes

In an ultimatum game

Which of the following is a dynamic game?

Which of the following is a sequential game?

Dynamic and static games have outcomes that

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

Deterring entry might require a firm to

A sub-game perfect Nash equilibrium is defined as

A disadvantage of moving too quickly is that

In a dynamic game,rational players

In the mini-case on pay-for-delay

Repeated games are conducive to

A holdup problem occurs

In a Stackelberg game,a monopolist could deter entry from a potential rival by

If a monopolist faces entry by a potential rival,investing to lower its marginal cost

In a finitely repeated prisoners' dilemma game

In the ultimatum game,one reason players don't choose the rational offer is

In a tit-for-tat strategy,a player

The Cournot and Stackelberg models are similar,except Cournot ________ and Stackelberg ________.

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

The Cournot and Stackelberg models are similar,except Cournot and Stackelberg .