Question 1

If an incumbent cannot commit and faces an identical potential entrant with relatively high fixed costs that are below the level where entry is blockaded,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)  produce a level of output that is greater than the Stackelberg leader level of output. 
A)  produce the Cournot duopolist level of output. 
B)  produce the Stackelberg leader level of output. 
C)  set price equal to marginal cost. 
D)  produce a level of output that is greater than the Stackelberg leader level of output.

Question 2

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 3

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.If the fixed cost of entry were to increase,which of the following would occur?

Accepted Answer

A)  The incumbent chooses the Cournot level of output. 
B)  The incumbent shuts down. 
C)  The entry-deterring level of output rises. 
D)  The entry-deterring level of output falls. 
A)  The incumbent chooses the Cournot level of output. 
B)  The incumbent shuts down. 
C)  The entry-deterring level of output rises. 
D)  The entry-deterring level of output falls.

Question 4

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 5

In a two-player simultaneous game where neither player has a dominant strategy,

Accepted Answer

A)  there is never a Nash equilibrium. 
B)  there is only one Nash equilibrium. 
C)  the actual outcome is unpredictable. 
D)  the actual outcome will not be a Nash equilibrium. 
A)  there is never a Nash equilibrium. 
B)  there is only one Nash equilibrium. 
C)  the actual outcome is unpredictable. 
D)  the actual outcome will not be a Nash equilibrium.

Question 6

-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 will happen if the government offers a $30 subsidy to airlines that serve this route?

Accepted Answer

A)  Both firms will enter profitably. 
B)  Firm A will decide not to enter since firm B will. 
C)  Firm B is still better off not entering. 
D)  Neither firm will have a dominant strategy. 
A)  Both firms will enter profitably. 
B)  Firm A will decide not to enter since firm B will. 
C)  Firm B is still better off not entering. 
D)  Neither firm will have a dominant strategy.

Question 7

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 8

A sub-game perfect Nash equilibrium is defined as

Accepted Answer

A)  a set of strategies that are a Nash equilibrium in every subgame of a static game. 
B)  a set of strategies that are a Nash equilibrium in every subgame of a dynamic game. 
C)  a set of strategies that are a Nash equilibrium in a single subgame of a dynamic game. 
D)  the game within the game. 
A)  a set of strategies that are a Nash equilibrium in every subgame of a static game. 
B)  a set of strategies that are a Nash equilibrium in every subgame of a dynamic game. 
C)  a set of strategies that are a Nash equilibrium in a single subgame of a dynamic game. 
D)  the game within the game.

Question 9

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 10

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 11

If a Cournot duopolist announced that it will double its output

Accepted Answer

A)  it becomes the leader. 
B)  the other firm does not view the announcement as credible. 
C)  the other firm will shut down. 
D)  the other firm will double output also. 
A)  it becomes the leader. 
B)  the other firm does not view the announcement as credible. 
C)  the other firm will shut down. 
D)  the other firm will double output also.

Question 12

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 13

A strategy is dominant if

Accepted Answer

A)  it yields a greater payoff than any other player receives. 
B)  it yields a payoff at least as large as that from any other strategy, regardless of the actions of other players. 
C)  the player cannot gain by changing strategy, assuming that no other player changes strategy. 
D)  it is part of a Nash equilibrium. 
A)  it yields a greater payoff than any other player receives. 
B)  it yields a payoff at least as large as that from any other strategy, regardless of the actions of other players. 
C)  the player cannot gain by changing strategy, assuming that no other player changes strategy. 
D)  it is part of a Nash equilibrium.

Question 14

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 15

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 16

In auctions,the winner always pays a price equal to the highest (his)bid.

Accepted Answer

A) True 
 B)False

Question 17

-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 18

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 19

If neither firm has a dominant strategy,a Nash equilibrium cannot exist.

Accepted Answer

A) True 
 B)False

If an incumbent cannot commit and faces an identical potential entrant with relatively high fixed costs that are below the level where entry is blockaded,the incumbent will

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

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.If the fixed cost of entry were to increase,which of the following would occur?

Collusion is more likely to occur when

In a two-player simultaneous game where neither player has a dominant strategy,

-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 will happen if the government offers a $30 subsidy to airlines that serve this route?

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

A sub-game perfect Nash equilibrium is defined as

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

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

If a Cournot duopolist announced that it will double its output

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

A strategy is dominant if

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

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

In auctions,the winner always pays a price equal to the highest (his)bid.

-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

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

If neither firm has a dominant strategy,a Nash equilibrium cannot exist.

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 an incumbent cannot commit and faces an identical potential entrant with relatively high fixed costs that are below the level where entry is blockaded,the incumbent will

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

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.If the fixed cost of entry were to increase,which of the following would occur?

Collusion is more likely to occur when

In a two-player simultaneous game where neither player has a dominant strategy,

-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 will happen if the government offers a $30 subsidy to airlines that serve this route?

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

A sub-game perfect Nash equilibrium is defined as

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

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

If a Cournot duopolist announced that it will double its output

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

A strategy is dominant if

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

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

In auctions,the winner always pays a price equal to the highest (his)bid.

-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

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

If neither firm has a dominant strategy,a Nash equilibrium cannot exist.

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