Question 1

Price dispersion for a product falls when:

Accepted Answer

A) consumers search less. 
B) consumers are uninformed. 
C) the benefits received by consumers from search are higher than the costs. 
D) the cost of acquiring price information is very high. 
A) consumers search less. 
B) consumers are uninformed. 
C) the benefits received by consumers from search are higher than the costs. 
D) the cost of acquiring price information is very high.

Question 2

In an oligopoly game,the greater the number of players who are colluding:

Accepted Answer

A) the lower the possibility of cheating. 
B) the more elastic the demand curve of the cheater. 
C) the higher the payoff received by each player from colluding. 
D) the lower will be the profit from cheating. 
A) the lower the possibility of cheating. 
B) the more elastic the demand curve of the cheater. 
C) the higher the payoff received by each player from colluding. 
D) the lower will be the profit from cheating.

Question 3

In an oligopoly game,the possibility of cheating by one of the players:

Accepted Answer

A) is higher,the more the number of players in the game. 
B) is higher in case of repeated games. 
C) is lower,the more the number of players in the game. 
D) is lower if the game is played less than twice. 
A) is higher,the more the number of players in the game. 
B) is higher in case of repeated games. 
C) is lower,the more the number of players in the game. 
D) is lower if the game is played less than twice.

Question 4

Asymmetric information describes a situation in which:

Accepted Answer

A) both sides of the market are totally uninformed. 
B) one side of the market has better information than the other side of the market. 
C) the price is fixed and neither side of the market can influence it. 
D) the buyer can affect the price of the product while the seller cannot. 
A) both sides of the market are totally uninformed. 
B) one side of the market has better information than the other side of the market. 
C) the price is fixed and neither side of the market can influence it. 
D) the buyer can affect the price of the product while the seller cannot.

Question 5

Mia has been awarded a penalty kick.China's goalie has two possible strategies,to dive left or dive right.Mia can shoot left or shoot right.There is no time for the goalie to determine where the ball is going before she must commit herself to diving left or right.Suppose that the goalie always stops the shot if Mia shoots right and the goalie dives left.On the other hand,Mia always scores if she shoots right uncontested.Mia is not as adept at shooting to the left.When Mia kicks left the goalie stops the shot 75 percent of the time if she dives right,and Mia misses the open goal half the time when shooting left.
(
A)Summarize this game in a payoff matrix.

Accepted Answer

There is no Nash equilibrium s

Question 6

The table given below describes the payoffs to Jack and Jill when each chooses to produce rock,scissors,or paper.The payoff matrix indicates the dollar payments from the loser to the winner.
Table 14-4  
-Refer to Table 14-4.Assume for this question that "paper" is not allowed as a choice and identify the Nash equilibrium,if any.

Accepted Answer

A) (Rock,Rock) 
B) (Scissors,Scissors) 
C) (Rock,Scissors) 
D) There is no Nash equilibrium. 
A) (Rock,Rock) 
B) (Scissors,Scissors) 
C) (Rock,Scissors) 
D) There is no Nash equilibrium.

Question 7

Game theory is a method of analyzing:

Accepted Answer

A) the costs and benefits of a transaction. 
B) the situations in which there are interdependent outcomes. 
C) the factors that affect an individual's budget set. 
D) the relation between returns and productivity of factors. 
A) the costs and benefits of a transaction. 
B) the situations in which there are interdependent outcomes. 
C) the factors that affect an individual's budget set. 
D) the relation between returns and productivity of factors.

Question 8

The table given below shows the payoffs (in terms of years spent in the jail)to Sundance and Butch who choose between the options 'confess' and 'don't confess'.In each cell,the figure on the left indicates payoffs for Butch and the figure on the right indicates payoffs for Sundance.  
-In Table 14-5,what values for X and Y will make this payoff matrix a prisoner's dilemma?

Accepted Answer

A) X = 3 years,Y = 11 years 
B) X = 11 years,Y = 3 years 
C) X = 5 years,Y = 5 years 
D) X = 1 years,Y = 1 years 
A) X = 3 years,Y = 11 years 
B) X = 11 years,Y = 3 years 
C) X = 5 years,Y = 5 years 
D) X = 1 years,Y = 1 years

Question 9

Bella,a dentist,purchases a new sedan worth $25,000 after comparing the prices quoted by the different car dealers.She incurs a total transportation cost of $100 while visiting the different showrooms and loses fees worth $500 for spending four business hours away from the dental clinic.What will be the full price of the sedan?

Accepted Answer

A) $25,500 
B) $25,400 
C) $25,600 
D) $25,100 
A) $25,500 
B) $25,400 
C) $25,600 
D) $25,100

Question 10

Consider two commodities,a refrigerator worth $1,500 and a food processor worth $100.For which of these commodities will a consumer want to bear a higher search cost and why?

Accepted Answer

Search costs are the costs that consumer

Question 11

The table given below represents the payoff matrix of firms A and B,when they choose to produce either high output or low output.In each cell,the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs.  
-Given the information in Table 14-3,if X = 15 and Y = 10,which firm has a dominant strategy?

Accepted Answer

A) Firm A 
B) Firm B 
C) Both Firm A and Firm B 
D) Neither Firm A nor Firm B 
A) Firm A 
B) Firm B 
C) Both Firm A and Firm B 
D) Neither Firm A nor Firm B

Question 12

Which of the following is not true of advertising?

Accepted Answer

A) It results in diseconomies of scale in production. 
B) It can operate as a barrier to the entry of new firms. 
C) It creates a scope for breaking into an entrenched market. 
D) It influences the tastes and preferences of consumers. 
A) It results in diseconomies of scale in production. 
B) It can operate as a barrier to the entry of new firms. 
C) It creates a scope for breaking into an entrenched market. 
D) It influences the tastes and preferences of consumers.

Question 13

A prisoner's dilemma equilibrium is:

Accepted Answer

A) identical to the monopolistically competitive equilibrium. 
B) a Nash equilibrium. 
C) not a dominant-strategy equilibrium. 
D) the same as the perfectly competitive equilibrium. 
A) identical to the monopolistically competitive equilibrium. 
B) a Nash equilibrium. 
C) not a dominant-strategy equilibrium. 
D) the same as the perfectly competitive equilibrium.

Question 14

The _____ price of a product is the sum of the money price and the search cost that consumers incur.

Accepted Answer

A) choke 
B) selling 
C) retail 
D) full 
A) choke 
B) selling 
C) retail 
D) full

Question 15

Which of the following is likely to occur if two firms in a duopoly market decide to collude and produce the same output and charge the same price?

Accepted Answer

A) Each firm will receive twice the profit they earned before the agreement. 
B) Together the firms will produce less than the monopoly output. 
C) Each firm will receive exactly half of the monopoly profit. 
D) None of the firms will have an incentive to charge a lower price. 
A) Each firm will receive twice the profit they earned before the agreement. 
B) Together the firms will produce less than the monopoly output. 
C) Each firm will receive exactly half of the monopoly profit. 
D) None of the firms will have an incentive to charge a lower price.

Question 16

People are not always fully informed about product quality because:

Accepted Answer

A) they are more concerned about prices and least concerned about quality. 
B) their choices are typically affected by package design rather than the quality. 
C) the benefits from acquiring information about quality may not be worth the cost of gathering that information. 
D) the products available in a market are more or less homogenous,with very little price dispersion. 
A) they are more concerned about prices and least concerned about quality. 
B) their choices are typically affected by package design rather than the quality. 
C) the benefits from acquiring information about quality may not be worth the cost of gathering that information. 
D) the products available in a market are more or less homogenous,with very little price dispersion.

Question 17

Karen hires a carpenter from a firm providing carpentry services,for remodeling the cabinets in her kitchen.She is unaware of the productivity of the carpenter who is sent by the firm.The carpenter,however,is perfectly aware of the labor hours required for the task.Which of the following problems is being faced by Karen in this situation?

Accepted Answer

A) A prisoner's dilemma 
B) The asymmetric information problem 
C) The moral hazard problem 
D) The tragedy of commons 
A) A prisoner's dilemma 
B) The asymmetric information problem 
C) The moral hazard problem 
D) The tragedy of commons

Question 18

Which of the following is a defining characteristic of a prisoner's dilemma game?

Accepted Answer

A) There is no equilibrium in this game,so the strategic choice of one player is independent of the other's. 
B) The equilibrium is not a Nash equilibrium. 
C) The payoffs in equilibrium are lower than that could be achieved with different choices. 
D) Self-interested behavior by each player results in maximum personal gain but lower social gain. 
A) There is no equilibrium in this game,so the strategic choice of one player is independent of the other's. 
B) The equilibrium is not a Nash equilibrium. 
C) The payoffs in equilibrium are lower than that could be achieved with different choices. 
D) Self-interested behavior by each player results in maximum personal gain but lower social gain.

Question 19

The table given below represents the payoff matrix of firms A and B,when they choose to produce either high output or low output.In each cell,the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs.  
-If X = 15 and Y = 10,then the information in Table 14-3 implies that the game has:

Accepted Answer

A) a Nash equilibrium and a dominant strategy equilibrium. 
B) a Nash equilibrium but not a dominant-strategy equilibrium. 
C) no Nash equilibrium but has a dominant-strategy equilibrium. 
D) neither a Nash equilibrium nor a dominant-strategy equilibrium. 
A) a Nash equilibrium and a dominant strategy equilibrium. 
B) a Nash equilibrium but not a dominant-strategy equilibrium. 
C) no Nash equilibrium but has a dominant-strategy equilibrium. 
D) neither a Nash equilibrium nor a dominant-strategy equilibrium.

Question 20

All games that have a dominant-strategy equilibrium _____ have a Nash equilibrium;all games with a Nash equilibrium _____ have a dominant-strategy equilibrium.

Accepted Answer

A) may not;must 
B) must;must 
C) may not;may not 
D) must;may not 
A) may not;must 
B) must;must 
C) may not;may not 
D) must;may not

Price dispersion for a product falls when:

In an oligopoly game,the greater the number of players who are colluding:

In an oligopoly game,the possibility of cheating by one of the players:

Asymmetric information describes a situation in which:

Game theory is a method of analyzing:

Consider two commodities,a refrigerator worth $1,500 and a food processor worth $100.For which of these commodities will a consumer want to bear a higher search cost and why?

Which of the following is not true of advertising?

A prisoner's dilemma equilibrium is:

The _____ price of a product is the sum of the money price and the search cost that consumers incur.

Which of the following is likely to occur if two firms in a duopoly market decide to collude and produce the same output and charge the same price?

People are not always fully informed about product quality because:

Which of the following is a defining characteristic of a prisoner's dilemma game?

All games that have a dominant-strategy equilibrium _ have a Nash equilibrium;all games with a Nash equilibrium _ have a dominant-strategy equilibrium.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 14: Game Theory and the Economics of Information

Price dispersion for a product falls when:

In an oligopoly game,the greater the number of players who are colluding:

In an oligopoly game,the possibility of cheating by one of the players:

Asymmetric information describes a situation in which:

Game theory is a method of analyzing:

Consider two commodities,a refrigerator worth $1,500 and a food processor worth $100.For which of these commodities will a consumer want to bear a higher search cost and why?

Which of the following is not true of advertising?

A prisoner's dilemma equilibrium is:

The _____ price of a product is the sum of the money price and the search cost that consumers incur.

Which of the following is likely to occur if two firms in a duopoly market decide to collude and produce the same output and charge the same price?

People are not always fully informed about product quality because:

Which of the following is a defining characteristic of a prisoner's dilemma game?

All games that have a dominant-strategy equilibrium _____ have a Nash equilibrium;all games with a Nash equilibrium _____ have a dominant-strategy equilibrium.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

All games that have a dominant-strategy equilibrium _ have a Nash equilibrium;all games with a Nash equilibrium _ have a dominant-strategy equilibrium.