A) legal in the United States. B) not possible when firms interact repeatedly forever. C) more likely in industries with a large number of firms. D) None of the preceding answers is correct. A) legal in the United States. B) not possible when firms interact repeatedly forever. C) more likely in industries with a large number of firms. D) None of the preceding answers is correct.

The following depicts a normal-form game of price competition. $\begin{array}{l} \quad\quad\quad\quad\quad\quad\text { Firm B}\\ \text { Firm A} \begin{array}{|l|l|l|} \hline &\text { Low Price } & \text { High Price }\\ \hline & & \\ \text { Low Price } & 0,0 & 25,-5 \\ \hline & & \\ \text { High Price } & -5,25 & 10,10 \\ \hline \end{array}\end{array}$ Suppose that firm A deviates from a trigger strategy to support a high price.What is the present value of A's payoff from cheating?

A) 5 B) 20 C) 25 D) 35 A) 5 B) 20 C) 25 D) 35

The dominant strategy of player 1 in the following game is: $\begin{array}{c} \text { Player 2 }\\ \text { Player 1} \begin{array}{|l|l|l|l|} \hline & \mathrm{t} 1 & \mathrm{t} 2 & \mathrm{t} 3 \\ \hline & & & \\ \mathrm{S} 1 & 10,0 & 5,1 & 4,-200 \\ \hline & & & \\ \mathrm{S} 2 & 10,100 & 5,0 & 0,-100 \\ \hline \end{array}\end{array}$

A) S1. B) S2. C) S1 and S2. D) A dominant strategy does not exist. A) S1. B) S2. C) S1 and S2. D) A dominant strategy does not exist.

Refer to the normal-form game of price competition shown below. $\begin{array}{l} \quad\quad\quad\quad\quad\quad\text { Firm B}\\ \text { Firm A} \begin{array}{|l|l|l|} \hline & \text { C } & \text { D }\\ \hline & & \\ \text { A } & 0,7 & 5,2\\ \hline & & \\ \text { B } & 5,1 & 0,8 \\ \hline \end{array}\end{array}$ Which of the following represents firm B's full strategy space?

A) {A, C} B) {A, B} C) {(A, C) , (A, D) , (B, C) , (B, D) } D) {C, D} A) {A, C} B) {A, B} C) {(A, C) , (A, D) , (B, C) , (B, D) } D) {C, D}

The dominant strategy for player 1 in the following game is: $\begin{array}{c} \text { Player 2 }\\ \text { Player 1} \begin{array}{|l|l|l|l|} \hline & \mathrm{t} 1 & \mathrm{t} 2 & \mathrm{t} 3 \\ \hline & & & \\ \mathrm{S} 1 & 4,10 & 3,0 & 1,3 \\ \hline & & & \\ \mathrm{S} 2 & 0,0 & 2,10 & 10,3 \\ \hline \end{array}\end{array}$

A) S1. B) S2. C) S1 and S2. D) None of the preceding answers is correct. A) S1. B) S2. C) S1 and S2. D) None of the preceding answers is correct.

The figure below presents information for a one-shot game. $\begin{array}{l} \quad\quad\quad\quad\quad\text { Firm B }\\ \text { Firm A} \begin{array}{|l|l|l|} \hline & \text { Low Price } & \text { High Price } \\ \hline \text { Low Price } & (2,2) & (10,-8) \\ \hline \text { HighPrice } & (-8,10) & (6,6) \\ \hline \end{array}\end{array}$ If this one-shot game is repeated 100 times,the Nash equilibrium payoffs of the players will be ________________ each period.

A) (2, 2) B) (10, ?8) C) (?8, 10) D) (6, 6) A) (2, 2) B) (10, ?8) C) (?8, 10) D) (6, 6)

Exam 10: Game Theory: Inside Oligopoly

If you advertise and your rival advertises,you each will earn $3 million in profits.If neither of you advertises,you will each earn $7 million in profits.However,if one of you advertises and the other does not,the firm that advertises will earn $10 million and the non-advertising firm will earn $1 million.If you and your rival plan to be in business for 15 years,then the Nash equilibrium is for:

(Multiple Choice)

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Question 61

If you advertise and your rival advertises,you each will earn $4 million in profits.If neither of you advertises,you will each earn $10 million in profits.However,if one of you advertises and the other does not,the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million.If you and your rival plan to be in business for only one year,the Nash equilibrium is:

(Multiple Choice)

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Question 62

Collusion is:

(Multiple Choice)

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Question 63

Which of the following conditions correctly describes a Nash equilibrium when two firms are in the market?

(Multiple Choice)

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Question 64

There are two existing firms in the market for computer chips.Firm A knows how to reduce the production costs for the chip and is considering whether to adopt the innovation or not.Innovation incurs a fixed setup cost of C,while increasing the revenue.However,once the new technology is adopted,another firm,B,can adopt it with a smaller setup cost of C/2.If A innovates and B does not,A earns $20 in revenue while B earns $0.If A innovates and B does likewise,both firms earn $15 in revenue.If neither firm innovates,both earn $5.Under what condition will firm A innovate?

(Multiple Choice)

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Question 65

If you advertise and your rival advertises,you each will earn $5 million in profits.If neither of you advertises,you will each earn $10 million in profits.However,if one of you advertises and the other does not,the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million.Which of the following is true?

(Multiple Choice)

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Question 66

The following depicts a normal-form game of price competition. Firm B Firm A Low Price High Price Low Price 0,0 25,-5 High Price -5,25 10,10 Suppose that firm A deviates from a trigger strategy to support a high price.What is the present value of A's payoff from cheating?

(Multiple Choice)

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Question 67

Which of the following is true?

(Multiple Choice)

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Question 68

The dominant strategy of player 1 in the following game is: Player 2 Player 1 1 2 3 1 10,0 5,1 4,-200 2 10,100 5,0 0,-100

(Multiple Choice)

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Question 69

The NCAA prohibits schools that are caught paying athletes from participating in bowl games,and sometimes the punishment is even more severe.Explain why schools don't break away from the NCAA and form a league in which athletes can legitimately be paid.(Hint: Use hypothetical payoffs to construct an illustrative normal-form game in which the strategies are "pay players" and "don't pay players." Then analyze the game in one-shot and infinitely repeated contexts.)

(Essay)

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Question 70

Which of the following is a correct statement about a Nash equilibrium in a two-player game?

(Multiple Choice)

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Question 71

If you advertise and your rival advertises,you each will earn $4 million in profits.If neither of you advertises,you will each earn $10 million in profits.However,if one of you advertises and the other does not,the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million.If you and your rival plan to be in business for 10 years,then the Nash equilibrium is:

(Multiple Choice)

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Question 72

If you advertise and your rival advertises,you each will earn $5 million in profits.If neither of you advertises,you will each earn $10 million in profits.However,if one of you advertises and the other does not,the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million.Which of the following is true?

(Multiple Choice)

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Question 73

You are the manager of a firm that is "bargaining" with another firm over how much to pay for a key input your firm uses in production.Which type of bargaining would be "better" from your firm's point of view,simultaneous-move bargaining or take-it or leave-it bargaining? Explain carefully.

(Essay)

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Question 74

Refer to the normal-form game of price competition shown below. Firm B Firm A C D A 0,7 5,2 B 5,1 0,8 Which of the following represents firm B's full strategy space?

(Multiple Choice)

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Question 75

In a one-shot game,if you advertise and your rival advertises,you will each earn $5 million in profits.If neither of you advertises,your rival will make $4 million and you will make $2 million.If you advertise and your rival does not,you will make $10 million and your rival will make $3 million.If your rival advertises and you do not,you will make $1 million and your rival will make $3 million. a.Write the above game in normal form. b.Do you have a dominant strategy? c.Does your rival have a dominant strategy? d.What is the Nash equilibrium for the one-shot game? e.How much would you be willing to bribe your rival not to advertise?

(Essay)

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Question 76

The dominant strategy for player 1 in the following game is: Player 2 Player 1 1 2 3 1 4,10 3,0 1,3 2 0,0 2,10 10,3

(Multiple Choice)

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Question 77

A finitely repeated game differs from an infinitely repeated game in that:

(Multiple Choice)

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Question 78

Suppose that you are a manager.You are considering whether or not to monitor employees with the payoffs in the normal-form game shown below. Worker Manager Work Shirk Monitor -1,1 1,-1 Don't Monitor 1,-1 -1,1 Management and a labor union are bargaining over how much of a $50 surplus to give to the union.The $50 is divisible up to one cent.The players have one shot to reach an agreement.Management has the ability to announce what it wants first,and then the labor union can accept or reject the offer.Both players get zero if the total amounts asked for exceed $50.Which of the following is true?

(Multiple Choice)

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Question 79

The figure below presents information for a one-shot game. Firm B Firm A Low Price High Price Low Price (2,2) (10,-8) HighPrice (-8,10) (6,6) If this one-shot game is repeated 100 times,the Nash equilibrium payoffs of the players will be ________________ each period.

(Multiple Choice)

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Question 80

Collusion is:

Which of the following conditions correctly describes a Nash equilibrium when two firms are in the market?

The following depicts a normal-form game of price competition. Firm B Firm A Low Price High Price Low Price 0,0 25,-5 High Price -5,25 10,10 Suppose that firm A deviates from a trigger strategy to support a high price.What is the present value of A's payoff from cheating?

Which of the following is true?

The dominant strategy of player 1 in the following game is: Player 2 Player 1 1 2 3 1 10,0 5,1 4,-200 2 10,100 5,0 0,-100

Which of the following is a correct statement about a Nash equilibrium in a two-player game?

You are the manager of a firm that is "bargaining" with another firm over how much to pay for a key input your firm uses in production.Which type of bargaining would be "better" from your firm's point of view,simultaneous-move bargaining or take-it or leave-it bargaining? Explain carefully.

Refer to the normal-form game of price competition shown below. Firm B Firm A C D A 0,7 5,2 B 5,1 0,8 Which of the following represents firm B's full strategy space?

The dominant strategy for player 1 in the following game is: Player 2 Player 1 1 2 3 1 4,10 3,0 1,3 2 0,0 2,10 10,3

A finitely repeated game differs from an infinitely repeated game in that:

The figure below presents information for a one-shot game. Firm B Firm A Low Price High Price Low Price (2,2) (10,-8) HighPrice (-8,10) (6,6) If this one-shot game is repeated 100 times,the Nash equilibrium payoffs of the players will be ________________ each period.

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

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