Question 1

If a strategy is a best response,then

Accepted Answer

A)  it will never be played. 
B)  it will never be part of a Nash equilibrium. 
C)  A and B are correct. 
D)  it could be part of a Nash equilibrium. 
A)  it will never be played. 
B)  it will never be part of a Nash equilibrium. 
C)  A and B are correct. 
D)  it could be part of a Nash equilibrium.

Question 2

Winner's curse is likely to happen in which of the following auctions?

Accepted Answer

A)  unexplored oil reserves 
B)  corn stored in a warehouse 
C)  1,000 ton of iron ore 
D)  U.S. Treasury Bonds 
A)  unexplored oil reserves 
B)  corn stored in a warehouse 
C)  1,000 ton of iron ore 
D)  U.S. Treasury Bonds

Question 3

In Dutch or first-price sealed-bid auctions,participants will bid less than their highest valuation.

Accepted Answer

A) True 
 B)False

Question 4

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 5

-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 6

Mutually Assured Destruction was a standing policy during the Cold War,in which the United States and the U.S.S.R.maintained and expanded nuclear arsenals beyond practical levels.What could explain such a phenomenon?

Accepted Answer

A)  insane public officials who were bent on world domination 
B)  a prisoners' dilemma 
C)  a leader-follower type game 
D)  tacit collusion 
A)  insane public officials who were bent on world domination 
B)  a prisoners' dilemma 
C)  a leader-follower type game 
D)  tacit collusion

Question 7

-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 has a dominant strategy. 
B)  Firm B has a dominant strategy. 
C)  Neither firm entering is a Nash equilibrium. 
D)  The outcome of the game is unpredictable. 
A)  Firm A has a dominant strategy. 
B)  Firm B has a dominant strategy. 
C)  Neither firm entering is a Nash equilibrium. 
D)  The outcome of the game is unpredictable.

Question 8

-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 9

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 the firm be willing to pay to deter entry?

Accepted Answer

A)  $250 million 
B)  $25 million 
C)  $100 million 
D)  $250 billion 
A)  $250 million 
B)  $25 million 
C)  $100 million 
D)  $250 billion

If a strategy is a best response,then

Winner's curse is likely to happen in which of the following auctions?

In Dutch or first-price sealed-bid auctions,participants will bid less than their highest valuation.

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

-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

Mutually Assured Destruction was a standing policy during the Cold War,in which the United States and the U.S.S.R.maintained and expanded nuclear arsenals beyond practical levels.What could explain such a phenomenon?

-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?

-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?

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 the firm be willing to pay to deter entry?

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

If a strategy is a best response,then

Winner's curse is likely to happen in which of the following auctions?

In Dutch or first-price sealed-bid auctions,participants will bid less than their highest valuation.

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

-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

Mutually Assured Destruction was a standing policy during the Cold War,in which the United States and the U.S.S.R.maintained and expanded nuclear arsenals beyond practical levels.What could explain such a phenomenon?

-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?

-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?

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 the firm be willing to pay to deter entry?

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