Question 1

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

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 2

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what happens if the government imposes a $20 per firm tax on firms that service this route?

Accepted Answer

A)  Neither firm has a dominant strategy. 
B)  Not entering is a dominant strategy for both firms. 
C)  Neither firm entering is a Nash equilibrium. 
D)  Only firm A will enter. 
A)  Neither firm has a dominant strategy. 
B)  Not entering is a dominant strategy for both firms. 
C)  Neither firm entering is a Nash equilibrium. 
D)  Only firm A will enter.

Question 3

Assume an industry,currently dominated by one firm,experiences a large decline in fixed costs.This will

Accepted Answer

A)  make entry of other firms more likely. 
B)  make entry of other firms less likely. 
C)  serve as higher barrier to entry. 
D)  induce the incumbent firm to exit the industry. 
A)  make entry of other firms more likely. 
B)  make entry of other firms less likely. 
C)  serve as higher barrier to entry. 
D)  induce the incumbent firm to exit the industry.

Question 4

Incumbents are unaffected by fixed costs of entry while potential entrants are affected by them because

Accepted Answer

A)  for potential entrants the cost is avoidable, while for the incumbent, it is not. 
B)  fixed costs will be greater for the potential entrant than for the incumbent. 
C)  fixed costs are zero for the incumbent. 
D)  incumbents will act to prevent entry at all costs. 
A)  for potential entrants the cost is avoidable, while for the incumbent, it is not. 
B)  fixed costs will be greater for the potential entrant than for the incumbent. 
C)  fixed costs are zero for the incumbent. 
D)  incumbents will act to prevent entry at all costs.

Question 5

-The game rock-paper-scissors has

Accepted Answer

A)  a mixed strategy equilibrium. 
B)  a dominant strategy equilibrium. 
C)  no equilibrium. 
D)  a pure strategy equilibrium. 
A)  a mixed strategy equilibrium. 
B)  a dominant strategy equilibrium. 
C)  no equilibrium. 
D)  a pure strategy equilibrium.

Question 6

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 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 q_B = 5 - (1

Question 8

The term prisoners' dilemma refers to a game in which

Accepted Answer

A)  there are no Nash equilibria. 
B)  there are no dominant strategies. 
C)  the payoff from playing the dominant strategy is the same for each player. 
D)  the payoff from playing the dominant strategy is not the highest payoff possible. 
A)  there are no Nash equilibria. 
B)  there are no dominant strategies. 
C)  the payoff from playing the dominant strategy is the same for each player. 
D)  the payoff from playing the dominant strategy is not the highest payoff possible.

Question 9

14.3 Sequential Dynamic Games  
-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 10

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 11

If an incumbent threatens to retaliate against entry,but its profits are greater under accommodated entry than under the proposed threat,potential entrants will ignore the threat.

Accepted Answer

A) True 
 B)False

Question 12

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 13

A game in economics is defined as

Accepted Answer

A)  something that is shown on ESPN. 
B)  competition in which strategic decision making is integral. 
C)  competition in general. 
D)  an actual strategy chosen by one or more economic agents. 
A)  something that is shown on ESPN. 
B)  competition in which strategic decision making is integral. 
C)  competition in general. 
D)  an actual strategy chosen by one or more economic agents.

Question 14

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.What policy could government adopt to prevent entry deterrence by the incumbent?

Accepted Answer

A)  production quotas 
B)  price ceiling 
C)  safety standards 
D)  None of the above is correct. 
A)  production quotas 
B)  price ceiling 
C)  safety standards 
D)  None of the above is correct.

Question 15

What is an example of the bidder's curse?

Accepted Answer

A)  addiction to auctions 
B)  paying less than the auctioned good value 
C)  Bid a value that is higher than the price of the good at a retail store. 
D)  Never win an auction. 
A)  addiction to auctions 
B)  paying less than the auctioned good value 
C)  Bid a value that is higher than the price of the good at a retail store. 
D)  Never win an auction.

Question 16

Which of the following is a dynamic game?

Accepted Answer

A)  rock-paper-scissors 
B)  flipping pennies 
C)  chess 
D)  the card game "war" 
A)  rock-paper-scissors 
B)  flipping pennies 
C)  chess 
D)  the card game "war"

Question 17

A dominated strategy

Accepted Answer

A)  may be part of a Nash equilibrium. 
B)  is never played. 
C)  can be a best response. 
D)  is always part of a mixed-strategy Nash equilibrium. 
A)  may be part of a Nash equilibrium. 
B)  is never played. 
C)  can be a best response. 
D)  is always part of a mixed-strategy Nash equilibrium.

Question 18

The Internet auction site eBay is an example of a(n)

Accepted Answer

A)  Sealed Bid Auction. 
B)  Second-Price Auction. 
C)  English Auction. 
D)  Both A and B. 
A)  Sealed Bid Auction. 
B)  Second-Price Auction. 
C)  English Auction. 
D)  Both A and B.

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.Which of the following is a Nash equilibrium?

Accepted Answer

A)  Both firms make advanced computers. 
B)  Both firms make basic computers. 
C)  Firm A makes basic computers and firm B makes advanced computers. 
D)  There are no Nash equilibria. 
A)  Both firms make advanced computers. 
B)  Both firms make basic computers. 
C)  Firm A makes basic computers and firm B makes advanced computers. 
D)  There are no Nash equilibria.

Question 20

One firm previously operated as a monopoly.Now,one potential entrant exists.Consumers would prefer

Accepted Answer

A)  entry, and the firms to split the output equally. 
B)  no entry, and for the incumbent to produce the Stackelberg leader level of output. 
C)  entry, and for the incumbent to produce the Stackelberg leader level of output. 
D)  no entry, and the monopoly to continue. 
A)  entry, and the firms to split the output equally. 
B)  no entry, and for the incumbent to produce the Stackelberg leader level of output. 
C)  entry, and for the incumbent to produce the Stackelberg leader level of output. 
D)  no entry, and the monopoly to continue.

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

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what happens if the government imposes a $20 per firm tax on firms that service this route?

Assume an industry,currently dominated by one firm,experiences a large decline in fixed costs.This will

Incumbents are unaffected by fixed costs of entry while potential entrants are affected by them because

-The game rock-paper-scissors has

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

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 term prisoners' dilemma refers to a game in which

14.3 Sequential Dynamic Games -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

If an incumbent threatens to retaliate against entry,but its profits are greater under accommodated entry than under the proposed threat,potential entrants will ignore the threat.

Fixed costs of entry create an advantage for potential entrants since incumbents have already made these expenditures while potential entrants can avoid these costs.

A game in economics is defined as

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.What policy could government adopt to prevent entry deterrence by the incumbent?

What is an example of the bidder's curse?

Which of the following is a dynamic game?

A dominated strategy

The Internet auction site eBay is an example of a(n)

-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.Which of the following is a Nash equilibrium?

One firm previously operated as a monopoly.Now,one potential entrant exists.Consumers would prefer

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

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

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,what happens if the government imposes a $20 per firm tax on firms that service this route?

Assume an industry,currently dominated by one firm,experiences a large decline in fixed costs.This will

Incumbents are unaffected by fixed costs of entry while potential entrants are affected by them because

-The game rock-paper-scissors has

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

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 term prisoners' dilemma refers to a game in which

14.3 Sequential Dynamic Games -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

If an incumbent threatens to retaliate against entry,but its profits are greater under accommodated entry than under the proposed threat,potential entrants will ignore the threat.

Fixed costs of entry create an advantage for potential entrants since incumbents have already made these expenditures while potential entrants can avoid these costs.

A game in economics is defined as

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.What policy could government adopt to prevent entry deterrence by the incumbent?

What is an example of the bidder's curse?

Which of the following is a dynamic game?

A dominated strategy

The Internet auction site eBay is an example of a(n)

-The above figure shows a payoff matrix for two firms,A and B,that must choose between selling basic computers or advanced computers.Which of the following is a Nash equilibrium?

One firm previously operated as a monopoly.Now,one potential entrant exists.Consumers would prefer

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