Question 1

An incumbent's threat to retaliate after a potential competitor enters the market will be taken seriously by potential competitors if

Accepted Answer

A)  the incumbent can still earn a profit after carrying out the threat. 
B)  the incumbent earns greater profit carrying out the threat than by accommodating entry. 
C)  the potential entrant cannot earn a profit if the threat is carried out. 
D)  the potential entrant's profit exceeds the incumbent's if the threat is carried out. 
A)  the incumbent can still earn a profit after carrying out the threat. 
B)  the incumbent earns greater profit carrying out the threat than by accommodating entry. 
C)  the potential entrant cannot earn a profit if the threat is carried out. 
D)  the potential entrant's profit exceeds the incumbent's if the threat is carried out.

Question 2

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.The dominant strategy for firm A is

Accepted Answer

A)  producing an advanced computer. 
B)  producing a basic computer. 
C)  copy firm B's action. 
D)  Firm A does not have a dominant strategy. 
A)  producing an advanced computer. 
B)  producing a basic computer. 
C)  copy firm B's action. 
D)  Firm A does not have a dominant strategy.

Question 3

For the following, please answer "True" or "False" and explain why.
-Fixed costs of entry create an advantage for potential entrants since incumbents have already made these expenditures while potential entrants can avoid these costs.

Accepted Answer

A) True 
 B)False

Question 4

-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 5

The result that different auction styles in which the good goes to the winner with the highest valuation of the good generate the same amount of revenue is called

Accepted Answer

A)  Revenue Equivalence Theorem. 
B)  Marginal Revenue Theory. 
C)  Auction Revenue Theory. 
D)  First Bid Revenue Theorem. 
A)  Revenue Equivalence Theorem. 
B)  Marginal Revenue Theory. 
C)  Auction Revenue Theory. 
D)  First Bid Revenue Theorem.

Question 6

-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.A Nash equilibrium

Accepted Answer

A)  occurs when both firms select a high advertising budget. 
B)  exists at any of the four possible strategy combinations because there is never an incentive to change strategy. 
C)  is for both firms to choose the low advertising budget because this yields the highest joint profit. 
D)  does not exist because firm A does not have a dominant strategy. 
A)  occurs when both firms select a high advertising budget. 
B)  exists at any of the four possible strategy combinations because there is never an incentive to change strategy. 
C)  is for both firms to choose the low advertising budget because this yields the highest joint profit. 
D)  does not exist because firm A does not have a dominant strategy.

Question 7

Suppose market demand is p = 10 - Q.Firms incur no cost of production.If firm A is the incumbent,can it deter the entry of its rival,firm B?

Accepted Answer

Firm B's reaction function is qB = 5 - (

Question 8

The individual with the highest valuation of the good will win in which of the following auctions?

Accepted Answer

A)  English Auction 
B)  Dutch Auction 
C)  Sealed Bid Auction 
D)  All of the above. 
A)  English Auction 
B)  Dutch Auction 
C)  Sealed Bid Auction 
D)  All of the above.

Question 9

-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.For firm B,

Accepted Answer

A)  setting a high price is the dominant strategy. 
B)  setting a low price is the dominant strategy. 
C)  there is no dominant strategy. 
D)  doing the opposite of firm A is always the best strategy. 
A)  setting a high price is the dominant strategy. 
B)  setting a low price is the dominant strategy. 
C)  there is no dominant strategy. 
D)  doing the opposite of firm A is always the best strategy.

Question 10

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.The mixed-strategy Nash equilibrium is

Accepted Answer

A)  Firm A produces an advanced computer with 80% chance, firm B produces an advanced computer with 20% chance. 
B)  Both firms produce advanced computers with 50% chance. 
C)  Firm A produces an advanced computer with 60% chance, firm B produces an advanced computer with 40% chance. 
D)  Both firms produce advanced computer with 80% chance. 
A)  Firm A produces an advanced computer with 80% chance, firm B produces an advanced computer with 20% chance. 
B)  Both firms produce advanced computers with 50% chance. 
C)  Firm A produces an advanced computer with 60% chance, firm B produces an advanced computer with 40% chance. 
D)  Both firms produce advanced computer with 80% chance.

Question 11

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,which one of the following statements is true?

Accepted Answer

A)  Firm A does not have a dominant strategy. 
B)  Firm B does not have a dominant strategy. 
C)  Neither firm entering is a Nash equilibrium. 
D)  The outcome of the game is unpredictable. 
A)  Firm A does not have a dominant strategy. 
B)  Firm B does not have a dominant strategy. 
C)  Neither firm entering is a Nash equilibrium. 
D)  The outcome of the game is unpredictable.

Question 12

For the following, please answer "True" or "False" and explain why.
-In a simultaneous game where both players prefer doing the opposite of what the opponent does,a Nash equilibrium does not exist.

Accepted Answer

A) True 
 B)False

Question 13

-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 14

-The above figure shows the payoffs to two firms deciding to open a gasoline station in an isolated town.If firm A decides first,what will happen? If there is a $60 fee to enter this market,what will happen?

Accepted Answer

If firm A decides first,it will enter.En

Question 15

For the following, please answer "True" or "False" and explain why.
-All normal-form games have at least one dominant strategy.

Accepted Answer

A) True 
 B)False

Question 16

When neither player has a dominant strategy,

Accepted Answer

A)  game theory will not provide information. 
B)  no Nash-Equilibrium exists. 
C)  at least one Nash-Equilibrium exists. 
D)  the game cannot be analyzed. 
A)  game theory will not provide information. 
B)  no Nash-Equilibrium exists. 
C)  at least one Nash-Equilibrium exists. 
D)  the game cannot be analyzed.

Question 17

-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 18

An auction in which the price announced by the auctioneer DESCENDS is called a

Accepted Answer

A)  Dutch Auction. 
B)  English Auction. 
C)  Sealed Bid Auction. 
D)  Descending Option Auction. 
A)  Dutch Auction. 
B)  English Auction. 
C)  Sealed Bid Auction. 
D)  Descending Option Auction.

Question 19

-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.Firm B's dominant strategy

Accepted Answer

A)  is to make basic computers. 
B)  is to make advanced computers. 
C)  is to adopt firm A's strategy. 
D)  does not exist in this game. 
A)  is to make basic computers. 
B)  is to make advanced computers. 
C)  is to adopt firm A's strategy. 
D)  does not exist in this game.

Question 20

-The above figure shows the payoffs to two airlines,A and B,of serving a particular route.Is there a Nash equilibrium? What is it? Explain.

Accepted Answer

Firm A entering and firm B not entering

An incumbent's threat to retaliate after a potential competitor enters the market will be taken seriously by potential competitors if

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.The dominant strategy for firm A is

For the following, please answer "True" or "False" and explain why. -Fixed costs of entry create an advantage for potential entrants since incumbents have already made these expenditures while potential entrants can avoid these costs.

-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

The result that different auction styles in which the good goes to the winner with the highest valuation of the good generate the same amount of revenue is called

-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.A Nash equilibrium

Suppose market demand is p = 10 - Q.Firms incur no cost of production.If firm A is the incumbent,can it deter the entry of its rival,firm B?

The individual with the highest valuation of the good will win in which of the following auctions?

-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.For firm B,

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.The mixed-strategy Nash equilibrium is

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,which one of the following statements is true?

For the following, please answer "True" or "False" and explain why. -In a simultaneous game where both players prefer doing the opposite of what the opponent does,a Nash equilibrium does not exist.

-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

-The above figure shows the payoffs to two firms deciding to open a gasoline station in an isolated town.If firm A decides first,what will happen? If there is a $60 fee to enter this market,what will happen?

For the following, please answer "True" or "False" and explain why. -All normal-form games have at least one dominant strategy.

When neither player has a dominant strategy,

-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

An auction in which the price announced by the auctioneer DESCENDS is called a

-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.Firm B's dominant strategy

-The above figure shows the payoffs to two airlines,A and B,of serving a particular route.Is there a Nash equilibrium? What is it? Explain.

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

An incumbent's threat to retaliate after a potential competitor enters the market will be taken seriously by potential competitors if

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.The dominant strategy for firm A is

For the following, please answer "True" or "False" and explain why. -Fixed costs of entry create an advantage for potential entrants since incumbents have already made these expenditures while potential entrants can avoid these costs.

-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

The result that different auction styles in which the good goes to the winner with the highest valuation of the good generate the same amount of revenue is called

-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.A Nash equilibrium

Suppose market demand is p = 10 - Q.Firms incur no cost of production.If firm A is the incumbent,can it deter the entry of its rival,firm B?

The individual with the highest valuation of the good will win in which of the following auctions?

-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.For firm B,

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.The mixed-strategy Nash equilibrium is

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,which one of the following statements is true?

For the following, please answer "True" or "False" and explain why. -In a simultaneous game where both players prefer doing the opposite of what the opponent does,a Nash equilibrium does not exist.

-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

-The above figure shows the payoffs to two firms deciding to open a gasoline station in an isolated town.If firm A decides first,what will happen? If there is a $60 fee to enter this market,what will happen?

For the following, please answer "True" or "False" and explain why. -All normal-form games have at least one dominant strategy.

When neither player has a dominant strategy,

-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

An auction in which the price announced by the auctioneer DESCENDS is called a

-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.Firm B's dominant strategy

-The above figure shows the payoffs to two airlines,A and B,of serving a particular route.Is there a Nash equilibrium? What is it? Explain.

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