Question 1

Which auctioned good is more likely to have different private values across potential bidders?

Accepted Answer

A)  a truckload of sand 
B)  a Monet painting 
C)  a brand new car 
D)  a gold bar 
A)  a truckload of sand 
B)  a Monet painting 
C)  a brand new car 
D)  a gold bar

Question 2

A player can choose among three strategies: T,M,and B.Nevertheless,strategy B is dominated by strategy T.This means that

Accepted Answer

A)  strategy T is always played. 
B)  strategy B is never played. 
C)  strategy B will be part of a Nash equilibrium. 
D)  strategy M is never played. 
A)  strategy T is always played. 
B)  strategy B is never played. 
C)  strategy B will be part of a Nash equilibrium. 
D)  strategy M is never played.

Question 3

If an incumbent faces an identical potential entrant with no costs of entry,the incumbent will

Accepted Answer

A)  produce the Cournot duopolist level of output. 
B)  produce the Stackelberg leader level of output. 
C)  set price equal to marginal cost. 
D)  shut down. 
A)  produce the Cournot duopolist level of output. 
B)  produce the Stackelberg leader level of output. 
C)  set price equal to marginal cost. 
D)  shut down.

Question 4

Assume a firm is a monopoly and enjoys $10,000,000 profits per year.The firm lobbies to have a moratorium passed by Congress on new firms in its market for the next 25 years.If there is no discount rate,how much would any firm(s)arguing against the moratorium be willing to spend to block it?

Accepted Answer

A)  something less than $250 million 
B)  $250 million 
C)  $251 million 
D)  $250 billion 
A)  something less than $250 million 
B)  $250 million 
C)  $251 million 
D)  $250 billion

Question 5

A surprising outcome of the Rock-Paper-Scissors game is that

Accepted Answer

A)  it is a clear example of a first mover advantage. 
B)  there is no pure-strategy Nash equilibrium. 
C)  it is best not to play the game. 
D)  it is a good way to determine who goes first in a sequential move game. 
A)  it is a clear example of a first mover advantage. 
B)  there is no pure-strategy Nash equilibrium. 
C)  it is best not to play the game. 
D)  it is a good way to determine who goes first in a sequential move game.

Question 6

What is the counter-intuitive solution to a mixed strategy?

Accepted Answer

A)  Player A makes Player B indifferent between its strategy choices. 
B)  Player A makes itself indifferent between its strategy choices. 
C)  Player A changes the rules of the game. 
D)  There are no mixed strategies in most games. 
A)  Player A makes Player B indifferent between its strategy choices. 
B)  Player A makes itself indifferent between its strategy choices. 
C)  Player A changes the rules of the game. 
D)  There are no mixed strategies in most games.

Question 7

-The above figure shows the payoff matrix facing an incumbent firm.Assuming a fixed cost of entry,will the incumbent deter entry? Why?

Accepted Answer

It will deter entry.

Question 8

Laboratory experiments of the ultimatum games revealed that

Accepted Answer

A)  participants' actions were always part of a Nash equilibrium. 
B)  participants always split the money equally. 
C)  the first mover always kept the smaller share. 
D)  the first mover always kept the largest share. 
A)  participants' actions were always part of a Nash equilibrium. 
B)  participants always split the money equally. 
C)  the first mover always kept the smaller share. 
D)  the first mover always kept the largest share.

Question 9

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 10

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 11

In a two-player simultaneous game,if player A has a dominant strategy and player B does not,player B will

Accepted Answer

A)  employ a mixed strategy. 
B)  choose his best strategy assuming that player A plays her dominant strategy. 
C)  not achieve a Nash equilibrium. 
D)  assume that player A does not choose her dominant strategy. 
A)  employ a mixed strategy. 
B)  choose his best strategy assuming that player A plays her dominant strategy. 
C)  not achieve a Nash equilibrium. 
D)  assume that player A does not choose her dominant strategy.

Question 12

-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 13

A firm producing a relatively large quantity before any rivals have entered the market,is an example of first-mover advantage.

Accepted Answer

A) True 
 B)False

Question 14

-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

Question 15

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 16

Which of the following is NOT part of solving a game?

Accepted Answer

A)  Write down all possible combinations of strategies. 
B)  Write down all possible payoffs and eliminate dominated strategies. 
C)  Solve for any Nash Equilibrium. 
D)  None of the above. 
A)  Write down all possible combinations of strategies. 
B)  Write down all possible payoffs and eliminate dominated strategies. 
C)  Solve for any Nash Equilibrium. 
D)  None of the above.

Question 17

In a non-cooperative,imperfect information,simultaneous-choice,one-period game,a Nash equilibrium

Accepted Answer

A)  will never exist. 
B)  will always include dominant strategies. 
C)  will always result in both players taking the same action. 
D)  may not maximize the sum of the firms' profits. 
A)  will never exist. 
B)  will always include dominant strategies. 
C)  will always result in both players taking the same action. 
D)  may not maximize the sum of the firms' profits.

Question 18

Two identical firms are considering entering a new market that currently has no suppliers.The demand is large enough for both firms to make a positive profit.There are no fixed costs to enter.Explain how a simultaneous decision to enter on the part of the two firms will lead to a different outcome than a sequential entry decision.

Accepted Answer

If the firms' entry decisions are simult

Question 19

Which of the following is LEAST likely characterized by mixed strategies?

Accepted Answer

A)  the choice of whether to go to war or not 
B)  the choice of which pitch to throw in baseball 
C)  the choice of which play to run in football 
D)  the choice of where to kick a soccer penalty shot 
A)  the choice of whether to go to war or not 
B)  the choice of which pitch to throw in baseball 
C)  the choice of which play to run in football 
D)  the choice of where to kick a soccer penalty shot

Question 20

Which auctioned good is more likely to have a common value across potential bidders?

Accepted Answer

A)  a truckload of baseball memorabilia 
B)  a Monet painting 
C)  a customized car 
D)  timber 
A)  a truckload of baseball memorabilia 
B)  a Monet painting 
C)  a customized car 
D)  timber

Which auctioned good is more likely to have different private values across potential bidders?

A player can choose among three strategies: T,M,and B.Nevertheless,strategy B is dominated by strategy T.This means that

If an incumbent faces an identical potential entrant with no costs of entry,the incumbent will

Assume a firm is a monopoly and enjoys $10,000,000 profits per year.The firm lobbies to have a moratorium passed by Congress on new firms in its market for the next 25 years.If there is no discount rate,how much would any firm(s)arguing against the moratorium be willing to spend to block it?

A surprising outcome of the Rock-Paper-Scissors game is that

What is the counter-intuitive solution to a mixed strategy?

-The above figure shows the payoff matrix facing an incumbent firm.Assuming a fixed cost of entry,will the incumbent deter entry? Why?

Laboratory experiments of the ultimatum games revealed that

Collusion is more likely to occur when

With regard to preventing entry,if identical firms act simultaneously,

In a two-player simultaneous game,if player A has a dominant strategy and player B does not,player B will

-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

A firm producing a relatively large quantity before any rivals have entered the market,is an example of first-mover advantage.

-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.

When neither player has a dominant strategy,

Which of the following is NOT part of solving a game?

In a non-cooperative,imperfect information,simultaneous-choice,one-period game,a Nash equilibrium

Which of the following is LEAST likely characterized by mixed strategies?

Which auctioned good is more likely to have a common value across potential bidders?

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 14: Game Theory

Which auctioned good is more likely to have different private values across potential bidders?

A player can choose among three strategies: T,M,and B.Nevertheless,strategy B is dominated by strategy T.This means that

If an incumbent faces an identical potential entrant with no costs of entry,the incumbent will

Assume a firm is a monopoly and enjoys $10,000,000 profits per year.The firm lobbies to have a moratorium passed by Congress on new firms in its market for the next 25 years.If there is no discount rate,how much would any firm(s)arguing against the moratorium be willing to spend to block it?

A surprising outcome of the Rock-Paper-Scissors game is that

What is the counter-intuitive solution to a mixed strategy?

-The above figure shows the payoff matrix facing an incumbent firm.Assuming a fixed cost of entry,will the incumbent deter entry? Why?

Laboratory experiments of the ultimatum games revealed that

Collusion is more likely to occur when

With regard to preventing entry,if identical firms act simultaneously,

In a two-player simultaneous game,if player A has a dominant strategy and player B does not,player B will

-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

A firm producing a relatively large quantity before any rivals have entered the market,is an example of first-mover advantage.

-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.

When neither player has a dominant strategy,

Which of the following is NOT part of solving a game?

In a non-cooperative,imperfect information,simultaneous-choice,one-period game,a Nash equilibrium

Which of the following is LEAST likely characterized by mixed strategies?

Which auctioned good is more likely to have a common value across potential bidders?

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters