Question 1

-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. A

Question 2

For the following, please answer "True" or "False" and explain why.
-A Nash equilibrium will always provide both players with their highest payoffs possible.

Accepted Answer

A) True 
 B)False  False

Question 3

The following is a simplified duopoly model of competition between two firms.Firms simultaneously choose the quantity of outputs to produce,and then profits are realized.Each firm is restricted to producing 25,35,50 or 100 units of output.The details of how the payoffs are derived are unimportant because payoffs are all given in the table below.
Firm 2
   
Find the Nash equilibrium(s)in the game.

Accepted Answer

(35,35)

Question 4

A single-period duopoly firm can choose output level A or B.The firm decides it will produce level A regardless of what the other firm produces.This decision may occur because

Accepted Answer

A)  producing the output level A is a dominant strategy. 
B)  this firm has simply decided to always produce at level A. 
C)  Both A and B are possible. 
D)  None of the above. 
A)  producing the output level A is a dominant strategy. 
B)  this firm has simply decided to always produce at level A. 
C)  Both A and B are possible. 
D)  None of the above.

Question 5

The "Normal-Form" of a game is a description including

Accepted Answer

A)  the players. 
B)  the strategies possible. 
C)  the payoffs. 
D)  All of the above 
A)  the players. 
B)  the strategies possible. 
C)  the payoffs. 
D)  All of the above

Question 6

-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.How many Nash equilibria are there?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  4 
A)  0 
B)  1 
C)  2 
D)  4

Question 7

Consider the game below:
   
a.Use backward induction to find the subgame perfect Nash equilibrium to the game.
b.Model the game with a strategic grid.Find all Nash Equilibrium to the normal-form game.Why is your answer different than in (a)?

Accepted Answer

a.(In,Acc)
b.
 @#IMG-DLM& (Out,Fight)and

Question 8

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.How many pure-strategy Nash equilibria are in this game?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  3 
A)  0 
B)  1 
C)  2 
D)  3

Question 9

Explain why to some game theorists,the idea of mixed strategies is appealing,and to others it is implausible.

Accepted Answer

Sometimes the pure Nash equilibria call

Question 10

Chess is an example of a

Accepted Answer

A)  game with perfect information. 
B)  game with imperfect information. 
C)  game with incomplete information. 
D)  static game. 
A)  game with perfect information. 
B)  game with imperfect information. 
C)  game with incomplete information. 
D)  static game.

Question 11

If only one firm operates in a market,and a potential entrant is blockaded from entering the market,then the incumbent firm must

Accepted Answer

A)  have acted to prevent entry. 
B)  be pricing where price equals marginal cost. 
C)  be a natural monopoly. 
D)  be the Stackelberg leader. 
A)  have acted to prevent entry. 
B)  be pricing where price equals marginal cost. 
C)  be a natural monopoly. 
D)  be the Stackelberg leader.

Question 12

Collusion is more likely to occur when

Accepted Answer

A)  there is fear of punishment for not colluding. 
B)  there is a known finite time horizon. 
C)  there are large gains to be made by cheating on an agreement. 
D)  the game lasts only one period. 
A)  there is fear of punishment for not colluding. 
B)  there is a known finite time horizon. 
C)  there are large gains to be made by cheating on an agreement. 
D)  the game lasts only one period.

Question 13

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.If the fixed cost of entry were to increase,which of the following would occur?

Accepted Answer

A)  The incumbent chooses the Cournot level of output. 
B)  The incumbent shuts down. 
C)  The entry-deterring level of output rises. 
D)  The entry-deterring level of output falls. 
A)  The incumbent chooses the Cournot level of output. 
B)  The incumbent shuts down. 
C)  The entry-deterring level of output rises. 
D)  The entry-deterring level of output falls.

Question 14

For the following, please answer "True" or "False" and explain why.
-In Dutch or first-price sealed-bid auctions,participants will bid less than their highest valuation.

Accepted Answer

A) True 
 B)False

Question 15

Consider the following game:
   
a.Does either player have a dominant strategy? Explain.
b.Use the process of iterated elimination of dominated strategies to reduce the possible outcomes for the game.
c.Find all pure Nash Equilibrium(s).

Accepted Answer

a.No,player 1 will choose down when L or

Question 16

-The above figure shows a payoff matrix for two firms,A and B,that must choose between a high-price strategy and a low-price strategy.The Nash equilibrium in this game

Accepted Answer

A)  does not exist. 
B)  occurs when both firms set a low price. 
C)  occurs when both firms set a high price. 
D)  occurs when firm A sets a high price and firm B sets a low price. 
A)  does not exist. 
B)  occurs when both firms set a low price. 
C)  occurs when both firms set a high price. 
D)  occurs when firm A sets a high price and firm B sets a low price.

Question 17

-The above figure shows the payoff matrix for two firms,A and B,selecting an advertising budget.The firms must choose between a high advertising budget and a low advertising budget.Firm A's dominant strategy

Accepted Answer

A)  does not exist. 
B)  is to do the opposite of firm B. 
C)  is to select a high advertising budget. 
D)  is to select a low advertising budget. 
A)  does not exist. 
B)  is to do the opposite of firm B. 
C)  is to select a high advertising budget. 
D)  is to select a low advertising budget.

Question 18

a.Suppose c = 0.Find any (pure strategy)Nash Equilibrium.
b.Suppose c = 2.Find any (pure strategy)Nash Equilibrium.

Accepted Answer

a.There ar

Question 19

How can a firm be made better off by limiting its options?

Accepted Answer

By limiting its options,the firm commits

Question 20

What aspects of a game are specified by "the rules of the game"?

Accepted Answer

A)  timing of players' moves 
B)  payoffs 
C)  information available to each player 
D)  All of the above 
A)  timing of players' moves 
B)  payoffs 
C)  information available to each player 
D)  All of the above

-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

For the following, please answer "True" or "False" and explain why. -A Nash equilibrium will always provide both players with their highest payoffs possible.

A single-period duopoly firm can choose output level A or B.The firm decides it will produce level A regardless of what the other firm produces.This decision may occur because

The "Normal-Form" of a game is a description including

-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.How many Nash equilibria are there?

Consider the game below: a.Use backward induction to find the subgame perfect Nash equilibrium to the game. b.Model the game with a strategic grid.Find all Nash Equilibrium to the normal-form game.Why is your answer different than in (a)?

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.How many pure-strategy Nash equilibria are in this game?

Explain why to some game theorists,the idea of mixed strategies is appealing,and to others it is implausible.

Chess is an example of a

If only one firm operates in a market,and a potential entrant is blockaded from entering the market,then the incumbent firm must

Collusion is more likely to occur when

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.If the fixed cost of entry were to increase,which of the following would occur?

For the following, please answer "True" or "False" and explain why. -In Dutch or first-price sealed-bid auctions,participants will bid less than their highest valuation.

Consider the following game: a.Does either player have a dominant strategy? Explain. b.Use the process of iterated elimination of dominated strategies to reduce the possible outcomes for the game. c.Find all pure Nash Equilibrium(s).

-The above figure shows a payoff matrix for two firms,A and B,that must choose between a high-price strategy and a low-price strategy.The Nash equilibrium in this game

-The above figure shows the payoff matrix for two firms,A and B,selecting an advertising budget.The firms must choose between a high advertising budget and a low advertising budget.Firm A's dominant strategy

a.Suppose c = 0.Find any (pure strategy)Nash Equilibrium. b.Suppose c = 2.Find any (pure strategy)Nash Equilibrium.

How can a firm be made better off by limiting its options?

What aspects of a game are specified by "the rules of the game"?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 13: Game Theory

-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

For the following, please answer "True" or "False" and explain why. -A Nash equilibrium will always provide both players with their highest payoffs possible.

A single-period duopoly firm can choose output level A or B.The firm decides it will produce level A regardless of what the other firm produces.This decision may occur because

The "Normal-Form" of a game is a description including

-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.How many Nash equilibria are there?

Consider the game below: a.Use backward induction to find the subgame perfect Nash equilibrium to the game. b.Model the game with a strategic grid.Find all Nash Equilibrium to the normal-form game.Why is your answer different than in (a)?

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.How many pure-strategy Nash equilibria are in this game?

Explain why to some game theorists,the idea of mixed strategies is appealing,and to others it is implausible.

Chess is an example of a

If only one firm operates in a market,and a potential entrant is blockaded from entering the market,then the incumbent firm must

Collusion is more likely to occur when

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.If the fixed cost of entry were to increase,which of the following would occur?

For the following, please answer "True" or "False" and explain why. -In Dutch or first-price sealed-bid auctions,participants will bid less than their highest valuation.

Consider the following game: a.Does either player have a dominant strategy? Explain. b.Use the process of iterated elimination of dominated strategies to reduce the possible outcomes for the game. c.Find all pure Nash Equilibrium(s).

-The above figure shows a payoff matrix for two firms,A and B,that must choose between a high-price strategy and a low-price strategy.The Nash equilibrium in this game

-The above figure shows the payoff matrix for two firms,A and B,selecting an advertising budget.The firms must choose between a high advertising budget and a low advertising budget.Firm A's dominant strategy

a.Suppose c = 0.Find any (pure strategy)Nash Equilibrium. b.Suppose c = 2.Find any (pure strategy)Nash Equilibrium.

How can a firm be made better off by limiting its options?

What aspects of a game are specified by "the rules of the game"?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters