Question 1

The "Normal-Form" of a game is a description including

Accepted Answer

A) the players. 
B) the strategies possible. 
C) the payoffs. 
D) All of the above 
A) the players. 
B) the strategies possible. 
C) the payoffs. 
D) All of the above D

Question 2

Game theory shows that

Accepted Answer

A) sometimes pursuing profit maximization will not yield the highest joint profit. 
B) interdependencies between firms have to be taken into account when few firms dominate the market. 
C) in an oligopolistic market,firms are likely to collude. 
D) All of the above. 
A) sometimes pursuing profit maximization will not yield the highest joint profit. 
B) interdependencies between firms have to be taken into account when few firms dominate the market. 
C) in an oligopolistic market,firms are likely to collude. 
D) All of the above. D

Question 3

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. A

Question 4

Why is collusion more likely in a repeated game?

Accepted Answer

First,a firm can signal other firms that

Question 5

After analyzing his opponent a tennis player decides to serve 10% of his serves to the left,50% of his serves to the right,and 40% of his serves at the body of his opponent.This illustrates a

Accepted Answer

A) deterministic strategy. 
B) dominant strategy. 
C) mixed strategy. 
D) non-game theoretic problem. 
A) deterministic strategy. 
B) dominant strategy. 
C) mixed strategy. 
D) non-game theoretic problem.

Question 6

If a player has a dominant strategy in a simultaneous-move game,then she is sure to get her best outcome.

Accepted Answer

A) True 
 B)False

Question 7

Consider the game below:   
a.Use backward induction to find the subgame perfect Nash equilibrium to the game.
b.Model the game with a strategic grid.Find all Nash Equilibrium to the normal-form game.Why is your answer different than in (a)?

Accepted Answer

a.(In,Acc)
b.
 @#IMG-DLM& (Out,Fight)and

Question 8

-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 9

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.Now the payoff of the firm who produces a basic computer falls to 10 if the other firm chooses to produce an advanced computer.Then the joint profits

Accepted Answer

A) will be maximized at a Nash equilibrium. 
B) will be maximized when both firms take different actions. 
C) will be maximized when both firms choose to produce advanced computers. 
D) will be maximized when both firms choose to produce basic computers. 
A) will be maximized at a Nash equilibrium. 
B) will be maximized when both firms take different actions. 
C) will be maximized when both firms choose to produce advanced computers. 
D) will be maximized when both firms choose to produce basic computers.

Question 10

Consider two agents simultaneously deciding whether to contribute to a public good - the good is said to be public because,if it is made available,an agent who free-rides by paying nothing gets just as much pleasure from its enjoyment as an agent who paid for it.If at least one agent contributes to the construction of the public good,both agents will enjoy a payoff of four from the public good.To ensure the public good is constructed,player one must pay c1 or player two must pay c2.Assume that c1 2 1 = c2 = 1,write out the mixed strategy NE and find the probability that the public good is provided?
d.If c1 = c2 = 3,write out the mixed strategy NE and find the probability that the public good is provided?

Accepted Answer

a.There are two pure-strategy NE: (Contr

Question 11

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 12

-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 13

-The above figure shows the payoff matrix for two firms,A and B,selecting an advertising budget.The firms must choose between a high advertising budget and a low advertising budget.Firm A's dominant strategy

Accepted Answer

A) does not exist. 
B) is to do the opposite of firm B. 
C) is to select a high advertising budget. 
D) is to select a low advertising budget. 
A) does not exist. 
B) is to do the opposite of firm B. 
C) is to select a high advertising budget. 
D) is to select a low advertising budget.

Question 14

How can a firm be made better off by limiting its options?

Accepted Answer

By limiting its options,the firm commits

Question 15

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.How many pure-strategy Nash equilibria are in this game?

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 3 
A) 0 
B) 1 
C) 2 
D) 3

Question 16

-The above figure shows the payoff for two firms,A and B,that must each choose to produce either an advanced computer or a basic computer.Determine the dominant strategies for each firm (if any)and the Nash equilibria (if any).

Accepted Answer

Neither firm has a dominant strategy.Eac

Question 17

-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 A,

Accepted Answer

A) setting a low price is the dominant strategy. 
B) setting a high price is the dominant strategy. 
C) setting a high price when firm B sets a high price,and setting a low price when firm B sets a low price is the dominant strategy. 
D) setting a high price when firm B sets a low price,and setting a low price when firm B sets a high price is the dominant strategy. 
A) setting a low price is the dominant strategy. 
B) setting a high price is the dominant strategy. 
C) setting a high price when firm B sets a high price,and setting a low price when firm B sets a low price is the dominant strategy. 
D) setting a high price when firm B sets a low price,and setting a low price when firm B sets a high price is the dominant strategy.

Question 18

Chess is an example of a

Accepted Answer

A) game with perfect information. 
B) game with imperfect information. 
C) game with incomplete information. 
D) static game. 
A) game with perfect information. 
B) game with imperfect information. 
C) game with incomplete information. 
D) static game.

Question 19

All normal-form games have at least one dominant strategy.

Accepted Answer

A) True 
 B)False

Question 20

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.Assuming a fixed cost of entry,the outcome will be that the incumbent

Accepted Answer

A) deters entry. 
B) chooses the Stackelberg leader level of output but the potential entrant does not enter anyway. 
C) chooses the Stackelberg leader level of output and the potential entrant enters. 
D) deters entry and earns zero profit. 
A) deters entry. 
B) chooses the Stackelberg leader level of output but the potential entrant does not enter anyway. 
C) chooses the Stackelberg leader level of output and the potential entrant enters. 
D) deters entry and earns zero profit.

The "Normal-Form" of a game is a description including

Game theory shows that

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

Why is collusion more likely in a repeated game?

After analyzing his opponent a tennis player decides to serve 10% of his serves to the left,50% of his serves to the right,and 40% of his serves at the body of his opponent.This illustrates a

If a player has a dominant strategy in a simultaneous-move game,then she is sure to get her best outcome.

Consider the game below: a.Use backward induction to find the subgame perfect Nash equilibrium to the game. b.Model the game with a strategic grid.Find all Nash Equilibrium to the normal-form game.Why is your answer different than in (a)?

-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 payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.Now the payoff of the firm who produces a basic computer falls to 10 if the other firm chooses to produce an advanced computer.Then the joint profits

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

-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

-The above figure shows the payoff matrix for two firms,A and B,selecting an advertising budget.The firms must choose between a high advertising budget and a low advertising budget.Firm A's dominant strategy

How can a firm be made better off by limiting its options?

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.How many pure-strategy Nash equilibria are in this game?

-The above figure shows the payoff for two firms,A and B,that must each choose to produce either an advanced computer or a basic computer.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 a high-price strategy and a low-price strategy.For firm A,

Chess is an example of a

All normal-form games have at least one dominant strategy.

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.Assuming a fixed cost of entry,the outcome will be that the incumbent

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 13: Game Theory

The "Normal-Form" of a game is a description including

Game theory shows that

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

Why is collusion more likely in a repeated game?

After analyzing his opponent a tennis player decides to serve 10% of his serves to the left,50% of his serves to the right,and 40% of his serves at the body of his opponent.This illustrates a

If a player has a dominant strategy in a simultaneous-move game,then she is sure to get her best outcome.

Consider the game below: a.Use backward induction to find the subgame perfect Nash equilibrium to the game. b.Model the game with a strategic grid.Find all Nash Equilibrium to the normal-form game.Why is your answer different than in (a)?

-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 payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.Now the payoff of the firm who produces a basic computer falls to 10 if the other firm chooses to produce an advanced computer.Then the joint profits

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

-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

-The above figure shows the payoff matrix for two firms,A and B,selecting an advertising budget.The firms must choose between a high advertising budget and a low advertising budget.Firm A's dominant strategy

How can a firm be made better off by limiting its options?

-The above figure shows the payoff matrix for two firms,A and B,choosing to produce a basic computer or an advanced computer.How many pure-strategy Nash equilibria are in this game?

-The above figure shows the payoff for two firms,A and B,that must each choose to produce either an advanced computer or a basic computer.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 a high-price strategy and a low-price strategy.For firm A,

Chess is an example of a

All normal-form games have at least one dominant strategy.

-The above figure shows the payoff matrix facing an incumbent firm and a potential entrant.Assuming a fixed cost of entry,the outcome will be that the incumbent

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Pricing and Advertising

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters