Question 1

If a Cournot duopolist announced that it will double its output,the other firm does not view the announcement as credible because

Accepted Answer

A)  the announcing firm's profits will fall if it carries out the threat. 
B)  the other firm's profits will fall if the announcing firm carries out the threat. 
C)  the other firm's profits will rise if the announcing firm carries out the threat. 
D)  the other firm will double output also. 
A)  the announcing firm's profits will fall if it carries out the threat. 
B)  the other firm's profits will fall if the announcing firm carries out the threat. 
C)  the other firm's profits will rise if the announcing firm carries out the threat. 
D)  the other firm will double output also.

Question 2

An incumbent monopolist producing more output than necessary might be able to keep potential rivals from entering

Accepted Answer

A)  by flooding the market with products below its marginal cost in the short run. 
B)  if learning by doing reduces marginal cost. 
C)  if the long-run marginal cost can be lowered below the potential entrant's short-run marginal cost. 
D)  All of the above. 
A)  by flooding the market with products below its marginal cost in the short run. 
B)  if learning by doing reduces marginal cost. 
C)  if the long-run marginal cost can be lowered below the potential entrant's short-run marginal cost. 
D)  All of the above.

Question 3

If firms have different costs and market demand only supports the quantity the incumbent produces,then the incumbent's threat to use limit pricing

Accepted Answer

A)  is credible. 
B)  is not credible. 
C)  would be illegal. 
D)  is unable to be determined with the information given. 
A)  is credible. 
B)  is not credible. 
C)  would be illegal. 
D)  is unable to be determined with the information given.

Question 4

With regard to preventing entry,if identical firms act simultaneously

Accepted Answer

A)  they cannot credibly threaten each other. 
B)  they will all incur losses. 
C)  only one firm will enter the market. 
D)  none of them will enter the market. 
A)  they cannot credibly threaten each other. 
B)  they will all incur losses. 
C)  only one firm will enter the market. 
D)  none of them will enter the market.

Question 5

In a repeated prisoners' dilemma game

Accepted Answer

A)  the players act sequentially. 
B)  the outcomes are the same as in a static prisoners' dilemma game. 
C)  firms' choices are not influenced by their opponents' actions. 
D)  cooperation may result if the game is played indefinitely. 
A)  the players act sequentially. 
B)  the outcomes are the same as in a static prisoners' dilemma game. 
C)  firms' choices are not influenced by their opponents' actions. 
D)  cooperation may result if the game is played indefinitely.

Question 6

Designing your products with proprietary technology,is a way to

Accepted Answer

A)  protect intellectual property. 
B)  increase switching costs for your customers. 
C)  grandfather in your products. 
D)  decrease your marginal cost. 
A)  protect intellectual property. 
B)  increase switching costs for your customers. 
C)  grandfather in your products. 
D)  decrease your marginal cost.

Question 7

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.The potential entrant cannot earn a profit if the incumbent

Accepted Answer

A)  chooses the Cournot level of output. 
B)  chooses the Stackelberg leader level of output. 
C)  shuts down. 
D)  deters entry. 
A)  chooses the Cournot level of output. 
B)  chooses the Stackelberg leader level of output. 
C)  shuts down. 
D)  deters entry.

Question 8

If Intel moves first and makes a large investment in a chip fabrication plant in Bolivia in exchange for tax credits,Intel has made ________ and Bolivia ________.

Accepted Answer

A)  a tactical error; will nationalize the plant 
B)  a specific investment; will create the tax credit 
C)  a specific investment; has a hostage 
D)  a general investment; no longer has to grant the tax credits 
A)  a tactical error; will nationalize the plant 
B)  a specific investment; will create the tax credit 
C)  a specific investment; has a hostage 
D)  a general investment; no longer has to grant the tax credits

Question 9

Regarding fixed costs of entry

Accepted Answer

A)  both incumbents and potential entrants are affected by them. 
B)  potential entrants are affected by them while incumbents are not. 
C)  neither incumbents nor potential entrants consider them. 
D)  incumbent's decisions are affected by them, while the potential entrant ignores them. 
A)  both incumbents and potential entrants are affected by them. 
B)  potential entrants are affected by them while incumbents are not. 
C)  neither incumbents nor potential entrants consider them. 
D)  incumbent's decisions are affected by them, while the potential entrant ignores them.

Question 10

One way to avoid holdups is to

Accepted Answer

A)  use contracts. 
B)  vertically integrate. 
C)  use multiple sources. 
D)  All of the above. 
A)  use contracts. 
B)  vertically integrate. 
C)  use multiple sources. 
D)  All of the above.

Question 11

In a beauty contest game such as predicting the average of respondents choosing a number between 0 and 100

Accepted Answer

A)  the outcome is not normally the Nash equilibrium for the game. 
B)  the winner usually exhibits level-3 reasoning. 
C)  the winner must understand the non-rationality of the players. 
D)  All of the above. 
A)  the outcome is not normally the Nash equilibrium for the game. 
B)  the winner usually exhibits level-3 reasoning. 
C)  the winner must understand the non-rationality of the players. 
D)  All of the above.

Question 12

By vertically integrating,two firms can

Accepted Answer

A)  increase market share. 
B)  avoid holdup problems. 
C)  limit the problems inherent in moving too quickly. 
D)  avoid antitrust issues. 
A)  increase market share. 
B)  avoid holdup problems. 
C)  limit the problems inherent in moving too quickly. 
D)  avoid antitrust issues.

Question 13

A player that starts at the end of the game and progresses to the first move to determine best responses

Accepted Answer

A)  doesn't understand how to play a game. 
B)  is acting irrationally. 
C)  is using backward induction. 
D)  is using the Stackelberg Strategy. 
A)  doesn't understand how to play a game. 
B)  is acting irrationally. 
C)  is using backward induction. 
D)  is using the Stackelberg Strategy.

Question 14

-The above figure shows the payoff to two gasoline stations,A and B,deciding to operate in an isolated town.If firm A chooses its strategy first,then

Accepted Answer

A)  firm A will not enter. 
B)  firm B's entry is blockaded. 
C)  both firms will enter. 
D)  firm A will enter and firm B will not. 
A)  firm A will not enter. 
B)  firm B's entry is blockaded. 
C)  both firms will enter. 
D)  firm A will enter and firm B will not.

Question 15

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)  most people believe in reciprocity, and will therefore get even if the prosper treats them badly. 
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)  most people believe in reciprocity, and will therefore get even if the prosper treats them badly. 
D)  that it is not a Nash equilibrium.

Question 16

-The above figure shows the payoff to two gasoline stations,A and B,deciding to operate in an isolated town.Suppose a $30 fee is required to enter the market.If firm A chooses its strategy first,then

Accepted Answer

A)  firm A will not enter. 
B)  neither firm will enter. 
C)  both firms will enter. 
D)  firm A will enter and firm B will not. 
A)  firm A will not enter. 
B)  neither firm will enter. 
C)  both firms will enter. 
D)  firm A will enter and firm B will not.

Question 17

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

Accepted Answer

A)  it is more profitable than accommodating entry. 
B)  it increases consumer surplus. 
C)  the potential entrant winds up with zero profit. 
D)  the incumbent would earn zero profit if it accommodated entry. 
A)  it is more profitable than accommodating entry. 
B)  it increases consumer surplus. 
C)  the potential entrant winds up with zero profit. 
D)  the incumbent would earn zero profit if it accommodated entry.

Question 18

A disadvantage of moving too quickly is that

Accepted Answer

A)  costs of entry are higher. 
B)  the likelihood of misunderstanding the demand is greater. 
C)  followers gain an advantage by learning from the first-mover. 
D)  All of the above. 
A)  costs of entry are higher. 
B)  the likelihood of misunderstanding the demand is greater. 
C)  followers gain an advantage by learning from the first-mover. 
D)  All of the above.

Question 19

-The above figure shows the payoff to two gasoline stations,A and B,deciding to operate in an isolated town.Suppose a $60 fee is required to enter the market.If firm A chooses its strategy first,then

Accepted Answer

A)  firm A will not enter. 
B)  neither firm will enter. 
C)  both firms will enter. 
D)  firm A will enter and firm B will not. 
A)  firm A will not enter. 
B)  neither firm will enter. 
C)  both firms will enter. 
D)  firm A will enter and firm B will not.

Question 20

If firms adopt a strategy that triggers a permanent punishment,the result in an indefinitely repeated game is

Accepted Answer

A)  undefined. 
B)  the noncooperative Nash equilibrium. 
C)  the collusive Nash equilibrium. 
D)  economically inefficient. 
A)  undefined. 
B)  the noncooperative Nash equilibrium. 
C)  the collusive Nash equilibrium. 
D)  economically inefficient.

If a Cournot duopolist announced that it will double its output,the other firm does not view the announcement as credible because

An incumbent monopolist producing more output than necessary might be able to keep potential rivals from entering

If firms have different costs and market demand only supports the quantity the incumbent produces,then the incumbent's threat to use limit pricing

With regard to preventing entry,if identical firms act simultaneously

In a repeated prisoners' dilemma game

Designing your products with proprietary technology,is a way to

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.The potential entrant cannot earn a profit if the incumbent

If Intel moves first and makes a large investment in a chip fabrication plant in Bolivia in exchange for tax credits,Intel has made and Bolivia .

Regarding fixed costs of entry

One way to avoid holdups is to

In a beauty contest game such as predicting the average of respondents choosing a number between 0 and 100

By vertically integrating,two firms can

A player that starts at the end of the game and progresses to the first move to determine best responses

-The above figure shows the payoff to two gasoline stations,A and B,deciding to operate in an isolated town.If firm A chooses its strategy first,then

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

-The above figure shows the payoff to two gasoline stations,A and B,deciding to operate in an isolated town.Suppose a $30 fee is required to enter the market.If firm A chooses its strategy first,then

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

A disadvantage of moving too quickly is that

-The above figure shows the payoff to two gasoline stations,A and B,deciding to operate in an isolated town.Suppose a $60 fee is required to enter the market.If firm A chooses its strategy first,then

If firms adopt a strategy that triggers a permanent punishment,the result in an indefinitely repeated game is

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 a Cournot duopolist announced that it will double its output,the other firm does not view the announcement as credible because

An incumbent monopolist producing more output than necessary might be able to keep potential rivals from entering

If firms have different costs and market demand only supports the quantity the incumbent produces,then the incumbent's threat to use limit pricing

With regard to preventing entry,if identical firms act simultaneously

In a repeated prisoners' dilemma game

Designing your products with proprietary technology,is a way to

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.The potential entrant cannot earn a profit if the incumbent

If Intel moves first and makes a large investment in a chip fabrication plant in Bolivia in exchange for tax credits,Intel has made ________ and Bolivia ________.

Regarding fixed costs of entry

One way to avoid holdups is to

In a beauty contest game such as predicting the average of respondents choosing a number between 0 and 100

By vertically integrating,two firms can

A player that starts at the end of the game and progresses to the first move to determine best responses

-The above figure shows the payoff to two gasoline stations,A and B,deciding to operate in an isolated town.If firm A chooses its strategy first,then

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

-The above figure shows the payoff to two gasoline stations,A and B,deciding to operate in an isolated town.Suppose a $30 fee is required to enter the market.If firm A chooses its strategy first,then

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

A disadvantage of moving too quickly is that

-The above figure shows the payoff to two gasoline stations,A and B,deciding to operate in an isolated town.Suppose a $60 fee is required to enter the market.If firm A chooses its strategy first,then

If firms adopt a strategy that triggers a permanent punishment,the result in an indefinitely repeated game is

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

If Intel moves first and makes a large investment in a chip fabrication plant in Bolivia in exchange for tax credits,Intel has made and Bolivia .