Question 1

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 2

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 3

-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 4

-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 5

A private auction is an auction in which

Accepted Answer

A)  individuals know their own value of the good and everyone else's valuation, too. 
B)  individuals have their own valuation of the good but don't know everyone else's. 
C)  many auctions are auctioned off at the same time. 
D)  only one good is auctioned off. 
A)  individuals know their own value of the good and everyone else's valuation, too. 
B)  individuals have their own valuation of the good but don't know everyone else's. 
C)  many auctions are auctioned off at the same time. 
D)  only one good is auctioned off.

Question 6

The ability to deter entry requires

Accepted Answer

A)  a credible threat that if entry occurs the firm is willing to produce more than they would otherwise. 
B)  a credible threat that if entry occurs the firm will not produce more than they would otherwise. 
C)  a good lawyer. 
D)  a clever accounting department. 
A)  a credible threat that if entry occurs the firm is willing to produce more than they would otherwise. 
B)  a credible threat that if entry occurs the firm will not produce more than they would otherwise. 
C)  a good lawyer. 
D)  a clever accounting department.

Question 7

Explain why it is unwise to bid more than your valuation of the good in a sealed bid second-price auction.

Accepted Answer

Assume you have a valuation of the good

Question 8

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 9

-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 10

-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 11

-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 12

-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 13

A sale in which property or a service is sold to the highest bidder is called a(n)

Accepted Answer

A)  auction. 
B)  bidder sale. 
C)  competitive market. 
D)  Austrian bundle. 
A)  auction. 
B)  bidder sale. 
C)  competitive market. 
D)  Austrian bundle.

Question 14

-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 15

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 16

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 17

-The above figure shows the payoff for two firms,A and B,that must each choose to sell either at a high or low price.Determine the dominant strategies for each firm (if any)and the Nash equilibria (if any).

Accepted Answer

For both firms the dominant strategy is

Question 18

Suppose two firms,A and B,are simultaneously considering entry into a new market.If neither enters,both earn zero.If both enter,they both lose 100.If one firm enters,it gains 50 while the other earns zero.Set up the payoff matrix for this game and determine if any Nash equilibria exist.Can you predict the outcome? What if firm A gets to decide first?

Accepted Answer

@#IMG-DLM& See the above figure.There are two Nash

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

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,how many pure Nash equilibria are there?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  It cannot be determined. 
A)  0 
B)  1 
C)  2 
D)  It cannot be determined.

What is an example of the bidder's curse?

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 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 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?

A private auction is an auction in which

The ability to deter entry requires

Explain why it is unwise to bid more than your valuation of the good in a sealed bid second-price auction.

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

-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 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?

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

A sale in which property or a service is sold to the highest bidder is called a(n)

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

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?

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 above figure shows the payoff for two firms,A and B,that must each choose to sell either at a high or low price.Determine the dominant strategies for each firm (if any)and the Nash equilibria (if any).

-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?

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,how many pure Nash equilibria are there?

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

What is an example of the bidder's curse?

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 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 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?

A private auction is an auction in which

The ability to deter entry requires

Explain why it is unwise to bid more than your valuation of the good in a sealed bid second-price auction.

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

-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 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?

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

A sale in which property or a service is sold to the highest bidder is called a(n)

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

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?

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 above figure shows the payoff for two firms,A and B,that must each choose to sell either at a high or low price.Determine the dominant strategies for each firm (if any)and the Nash equilibria (if any).

-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?

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,how many pure Nash equilibria are there?

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