Question 1

With limit pricing:

Accepted Answer

A)  MR = MC 
B)  P < AR 
C)  AR = AC 
D)  none of these. 
A)  MR = MC 
B)  P < AR 
C)  AR = AC 
D)  none of these. D

Question 2

Game Theory Classifications. 
Demonstrate whether each of the following statements is true or false.
A. In a zero-sum game, one player's gain is another player's loss.
B. Joint action is favored in all positive-sum games.
C. If a game that holds the potential for mutual gain, it is called a cooperative game.
D. In a sequential game players act at the same point in time and must make their initial moves in isolation without any direct knowledge of moves made by other players.
E. When conflict holds the potential for mutual loss, it is called a negative-sum game.

Accepted Answer

A. True. In a zero-sum game, one player's gain is another player's loss.
B. False. Joint action is favored in all cooperative games.
C. False. If parties are engaged in a game that holds the potential for mutual gain, it is called a positive-sum game.
D. False. In a simultaneous-move game, players act at the same point in time and must make their initial moves in isolation without any direct knowledge of moves made by other players.
E. True. When conflict holds the potential for mutual loss, it is called a negative-sum game.

Question 3

Market penetration pricing is:

Accepted Answer

A)  rarely confused with predatory pricing. 
B)  used to create a customer lock-in effect. 
C)  never used to create learning curve advantages. 
D)  seldom associated with network externalities. 
A)  rarely confused with predatory pricing. 
B)  used to create a customer lock-in effect. 
C)  never used to create learning curve advantages. 
D)  seldom associated with network externalities. B

Question 4

In the Prisoner's Dilemma game:

Accepted Answer

A)  complete solution is derived using the look ahead and extrapolate back principle. 
B)  each player moves in succession. 
C)  each player is aware of all prior moves. 
D)  none of these. 
A)  complete solution is derived using the look ahead and extrapolate back principle. 
B)  each player moves in succession. 
C)  each player is aware of all prior moves. 
D)  none of these.

Question 5

Game Types. Depict each of the following circumstances as a zero-sum game, a positive-sum game, or a negative-sum game. Explain your answer.
A. United Technologies and competitor 3M Co. engage in brutal price competition for a U.S. Department of Defense contract.
B. The ongoing discussion between American Express and its employees concerning a reduction in travel allowances for business trips.
C. Competitors Merck and Pfizer lobby Congress to increase Medicaid payments for pharmaceutical products.
D. McDonalds Corp. offers free food and prizes to loyal customers.
E. The bargaining that occurs between Wal-Mart and a municipal government concerning payment responsibility for interchange and access road costs made necessary by the location of a new Supercenter.

Accepted Answer

A. Zero-sum game. In a zero-sum game, on

Question 6

Solving complex sequential games that involve millions of calculations:

Accepted Answer

A)  requires a finite sequence of moves. 
B)  is impossible. 
C)  does not depend upon the look ahead and extrapolate back principle. 
D)  none of these. 
A)  requires a finite sequence of moves. 
B)  is impossible. 
C)  does not depend upon the look ahead and extrapolate back principle. 
D)  none of these.

Question 7

Game Types. Describe each of the following circumstances as a zero-sum game, a positive-sum game, or a negative-sum game. Illuminate your answer.
A. JP Morgan Chase and Citigroup battle over a Federal contract to oversee private accounts for social security investments.
B. Altria Group, maker of Marlboro cigarettes, battles with insurers over the payment of health care costs tied to smoking.
C. The hiring conflict that occurs among departments at Honeywell when an expansion in staff becomes necessary following the award of a big new contract.
D. The discussion between Johnson & Johnson senior management and employees concerning a new MBA tuition cost-sharing benefit.
E. General Electric agrees to sign long-term contracts with suppliers who meet stringent quality guidelines.

Accepted Answer

A. Zero-sum game. In a zero-sum game, on

Question 8

Secure Strategies. Imagine two competitors, Microsoft Corp. and Google, Inc., each facing an important strategic decision concerning the pricing of Internet search technology. Microsoft can choose either row in the payoff matrix defined below, whereas Google can choose either column. For Microsoft and Google, the choices are either "market penetration pricing" or "monopoly pricing." Notice that neither firm can unilaterally choose a given cell in the profit payoff matrix. The ultimate result of this one-shot, simultaneous-move game depends upon the choices made by both competitors. In this payoff matrix, the first number in each cell is the profit payoff to Microsoft; the second number is the profit payoff to Google.

Accepted Answer

The answer of Secure Strategies. Imagine two competitors, Microsoft Corp....

Question 9

When Gillette invests millions of dollars to establish high-quality brand-name recognition with repeat customers, it is involved in a:

Accepted Answer

A)  one-shot game. 
B)  repeated game of finite duration. 
C)  repeated game of infinite duration. 
D)  simultaneous-move game. 
A)  one-shot game. 
B)  repeated game of finite duration. 
C)  repeated game of infinite duration. 
D)  simultaneous-move game.

Question 10

Joint action is favored in:

Accepted Answer

A)  cooperative games. 
B)  positive-sum games. 
C)  negative-sum games. 
D)  zero-sum games. 
A)  cooperative games. 
B)  positive-sum games. 
C)  negative-sum games. 
D)  zero-sum games.

Question 11

When Coca-Cola and Pepsi vie to become exclusive suppliers of soft drinks at the next Olympics, they are competing in a:

Accepted Answer

A)  one-shot game with no secure strategy. 
B)  one-shot game with a secure strategy. 
C)  repeated game with no secure strategy. 
D)  repeated game with a secure strategy. 
A)  one-shot game with no secure strategy. 
B)  one-shot game with a secure strategy. 
C)  repeated game with no secure strategy. 
D)  repeated game with a secure strategy.

Question 12

The general principle for players in a sequential game is to:

Accepted Answer

A)  look ahead and extrapolate back. 
B)  trigger a sequence of irrational responses from competitors 
C)  trigger a sequence of rational decisions from competitors. 
D)  trigger a sequence of rational decisions and responses from competitors. 
A)  look ahead and extrapolate back. 
B)  trigger a sequence of irrational responses from competitors 
C)  trigger a sequence of rational decisions from competitors. 
D)  trigger a sequence of rational decisions and responses from competitors.

Question 13

In a simultaneous-move game, players:

Accepted Answer

A)  do not depend upon the best rational response by other players. 
B)  make their initial moves without knowledge of moves made by other players. 
C)  do not depend upon a rational response by other players. 
D)  anticipate the resulting sequence of moves made by competing players. 
A)  do not depend upon the best rational response by other players. 
B)  make their initial moves without knowledge of moves made by other players. 
C)  do not depend upon a rational response by other players. 
D)  anticipate the resulting sequence of moves made by competing players.

Question 14

Maintaining cartel-like agreements is made easier in the:

Accepted Answer

A)  absence of a Nash equilibrium. 
B)  presence of a Nash equilibrium. 
C)  presence of a secure strategy. 
D)  absence of a secure strategy. 
A)  absence of a Nash equilibrium. 
B)  presence of a Nash equilibrium. 
C)  presence of a secure strategy. 
D)  absence of a secure strategy.

Question 15

In a predatory pricing strategy:

Accepted Answer

A)  P  AVC 
D)  P < MC 
A)  P  AVC 
D)  P < MC

Question 16

Because any profit recorded by the buyer of an option is exactly matched by the seller's loss, options can be described as a:

Accepted Answer

A)  cooperative game. 
B)  positive-sum game. 
C)  negative-sum game. 
D)  zero-sum game. 
A)  cooperative game. 
B)  positive-sum game. 
C)  negative-sum game. 
D)  zero-sum game.

Question 17

Limit Pricing. Microsoft Corp. maintains an Internet web site called MSN Money with an amazing variety of investment news and information that the Company makes freely available to anyone with an Internet connection. MSN Money generates revenue by delivering relevant, cost-effective online advertising to brokers and other financial service providers.

Accepted Answer

The answer of Limit Pricing. Microsoft Corp. maintains an Internet...

Question 18

Every one-shot game:

Accepted Answer

A)  has at least one Nash equilibrium. 
B)  cannot have a Nash equilibrium. 
C)  can have multiple Nash equilibria. 
D)  none of these. 
A)  has at least one Nash equilibrium. 
B)  cannot have a Nash equilibrium. 
C)  can have multiple Nash equilibria. 
D)  none of these.

Question 19

In any strategic game:

Accepted Answer

A)  different strategies result in different payoffs. 
B)  each player is aware of all prior moves. 
C)  the allocation of positive payoffs is an equilibrium outcome. 
D)  multiple equilibrium outcomes are stable. 
A)  different strategies result in different payoffs. 
B)  each player is aware of all prior moves. 
C)  the allocation of positive payoffs is an equilibrium outcome. 
D)  multiple equilibrium outcomes are stable.

Question 20

In a game:

Accepted Answer

A)  there can be no more than two players. 
B)  agents strive to maximize their expected utility 
C)  payoffs are wholly determined by each player's own course of action 
D)  decision makers must take into account the reasoning of each other. 
A)  there can be no more than two players. 
B)  agents strive to maximize their expected utility 
C)  payoffs are wholly determined by each player's own course of action 
D)  decision makers must take into account the reasoning of each other.

With limit pricing:

Market penetration pricing is:

In the Prisoner's Dilemma game:

Solving complex sequential games that involve millions of calculations:

When Gillette invests millions of dollars to establish high-quality brand-name recognition with repeat customers, it is involved in a:

Joint action is favored in:

When Coca-Cola and Pepsi vie to become exclusive suppliers of soft drinks at the next Olympics, they are competing in a:

The general principle for players in a sequential game is to:

In a simultaneous-move game, players:

Maintaining cartel-like agreements is made easier in the:

In a predatory pricing strategy:

Because any profit recorded by the buyer of an option is exactly matched by the seller's loss, options can be described as a:

Every one-shot game:

In any strategic game:

In a game:

Nature and Scope of Managerial Economics

Economic Optimization

Demand and Supply

Demand Analysis

Demand Estimation

Forecasting

Production Analysis and Compensation Policy

Cost Analysis and Estimation

Linear Programming

Competitive Markets

Performance and Strategy in Competitive Markets

Monopoly and Monopsony

Monopolistic Competition and Oligopoly

Pricing Practices

Risk Analysis

Capital Budgeting

Organization Structure and Corporate Governance

Government in the Market Economy

Filters

Exam 14: Game Theory and Competitive Strategy

With limit pricing:

Market penetration pricing is:

In the Prisoner's Dilemma game:

Solving complex sequential games that involve millions of calculations:

When Gillette invests millions of dollars to establish high-quality brand-name recognition with repeat customers, it is involved in a:

Joint action is favored in:

When Coca-Cola and Pepsi vie to become exclusive suppliers of soft drinks at the next Olympics, they are competing in a:

The general principle for players in a sequential game is to:

In a simultaneous-move game, players:

Maintaining cartel-like agreements is made easier in the:

In a predatory pricing strategy:

Because any profit recorded by the buyer of an option is exactly matched by the seller's loss, options can be described as a:

Every one-shot game:

In any strategic game:

In a game:

Nature and Scope of Managerial Economics

Economic Optimization

Demand and Supply

Demand Analysis

Demand Estimation

Forecasting

Production Analysis and Compensation Policy

Cost Analysis and Estimation

Linear Programming

Competitive Markets

Performance and Strategy in Competitive Markets

Monopoly and Monopsony

Monopolistic Competition and Oligopoly

Pricing Practices

Risk Analysis

Capital Budgeting

Organization Structure and Corporate Governance

Government in the Market Economy

Filters