Deck 13: Oligopoly and Strategic Behavior

Question 1

The following table shows the four-firm concentration ratios for five separate industries. Use this table to answer the following questions:
In which two industries is market power the most concentrated?

A) beer brewing and adhesive manufacturing
B) breakfast cereals and adhesive manufacturing
C) chocolate confections and adhesive manufacturing
D) adhesive manufacturing and plastics product manufacturing
E) beer brewing and breakfast cereals

Answer 1

beer brewing and breakfast cereals

Question 2

The levels of profits in a cartel are

A) initially high,but then decrease as substitute goods emerge.
B) initially low,but then decrease as the level of competition increases.
C) initially low,but then increase as the level of competition increases.
D) near the monopoly level of profits.
E) zero.

Answer 2

near the monopoly level of profits.

Question 3

The following table shows the four-firm concentration ratios for five separate industries. Use this table to answer the following questions:
In which industry do the four largest firms collectively have the least market power?

A) beer brewing
B) breakfast cereals
C) chocolate confections
D) adhesive manufacturing
E) plastics product manufacturing

Answer 3

plastics product manufacturing

Question 4

The following table shows the dollar amount of sales in 2016 for the four largest firms in the above-ground pool industry. Total industry sales in 2016 were $467,000. Use this table to answer the following questions:
If Clear Water Island acquired Poolside Paradise,the concentration ratio would ________ and the market price of pools would likely ________.

A) increase; fall
B) increase; rise
C) decrease; not change
D) decrease; fall
E) decrease; rise

Question 5

Being part of a cartel is generally good for a firm because it can reduce output while increasing prices and profits.Yet most cartels have failed.Why is this the case?

A) Cartels lack a dominant strategy.
B) As the cartel becomes more profitable,competition increases.
C) Cartel members dislike having to equally share profits.
D) Each member of the cartel faces an incentive to cheat and produce more,while all of the other members honor the agreement.
E) Cartel members eventually go out of business.

Question 6

The following table shows the total dollar amount of sales in 2012 for the four largest firms in the adhesive manufacturing industry. Total industry sales in 2012 were $782,000. Use this table to answer the following questions:
The four-firm concentration ratio in this industry is __________ percent.

A) 20
B) 40
C) 60
D) 80
E) 100

Question 7

Economists measure oligopoly power present in an industry by using

A) capital ratios.
B) concentration ratios.
C) reserve ratios.
D) inequality ratios.
E) competition ratios.

Question 8

The following table shows the four-firm concentration ratios for five separate industries. Use this table to answer the following questions:
In which industry do the four largest firms collectively have the most market power?

A) beer brewing
B) breakfast cereals
C) chocolate confections
D) adhesive manufacturing
E) plastics product manufacturing

Question 9

The Organization of Petroleum Exporting Countries (OPEC)is considered a cartel by economists because the

A) firms agree to restrict output in order to increase prices and profits.
B) firms are controlled by the government.
C) firms in the cartel sell a homogenous (undifferentiated product).
D) firms sell a product with few substitutes.
E) organization is international and thus not subject to antitrust laws.

Question 10

Which of the following have greater incentives to collude and to form cartels in an effort to achieve monopoly-like profits?

A) monopolists
B) workers in a competitive labor market
C) monopolistic competitors
D) firms in a perfectly competitive market
E) oligopolists

Question 11

Which of the following industries is most likely an oligopoly?

A) restaurant
B) airline
C) gold mining
D) wheat growing
E) potato growing

Question 12

The following table shows the total dollar amount of sales in 2012 for the four largest firms in the adhesive manufacturing industry. Total industry sales in 2012 were $782,000. Use this table to answer the following questions:
If Glues R Us split into two separate companies,the concentration ratio would ________ and the market price of adhesive would likely ________.

A) increase; fall
B) increase; rise
C) decrease; not change
D) decrease; fall
E) decrease; rise

Question 13

A monopolistically competitive market consists of ________ seller(s),an oligopoly consists of ________ seller(s),and a monopoly consists of one seller.

A) one; many
B) one; two
C) a few; many
D) many; one
E) many; a few

Question 14

A monopolistically competitive market consists of many sellers,an oligopoly consists of ________ seller(s),and a monopoly consists of ________ seller(s).

A) one; one
B) one; two
C) a few; many
D) a few; one
E) many; one

Question 15

The following table shows the dollar amount of sales in 2016 for the four largest firms in the above-ground pool industry. Total industry sales in 2016 were $467,000. Use this table to answer the following questions:
The four-firm concentration ratio in this industry is __________ percent.

A) 24
B) 41
C) 62
D) 78
E) 94

Question 16

A firm operating in an oligopolistic market has ________ market power compared to a ________.

A) less; firm operating in a perfectly competitive market
B) the same amount of; firm operating in a perfectly competitive market
C) less; monopolist
D) the same amount of; monopolist
E) more; monopolist

Question 17

Like a pure monopoly,an oligopoly is characterized by

A) free entry and exit in the long run.
B) free entry and exit in the short run.
C) significant barriers to entry.
D) all firms in the market producing the socially efficient level of output in the long run.
E) a single firm selling a product with no close substitutes.

Question 18

When two or more firms set prices or quantities in unison,economists refer to them as a

A) cartel.
B) monopoly.
C) monopolistically competitive market.
D) perfectly competitive market.
E) predatory pricing unit.

Question 19

Which of the following is NOT a characteristic of an oligopoly?

A) small number of firms
B) has some pricing power
C) the firms are interdependent
D) the good produced may be unique or not
E) low barriers to entry

Question 20

Which of the following industries is most likely an oligopoly?

A) wheat
B) construction
C) cell phone
D) computer repair
E) house painting

Question 21

When more firms enter into a market that was previously characterized as a duopoly,it will

A) be easier for firms in the market to form a successful cartel.
B) be more difficult for firms in the market to form a successful cartel.
C) be just as difficult for firms in the market to form a successful cartel as it was before the new firms entered.
D) be impossible for firms in the market to form a successful cartel,whereas before the new firms entered,it would have been possible.
E) still be impossible for firms in the market to form a successful cartel.

Question 22

The following table shows a small community’s demand for monthly subscriptions to a streaming movie service. Assume that only two firms (Nextflix and Flixbuster) sell in this market, that each firm offers the same quality of service and movie selection, and that each firm’s marginal cost is constant and equal to 0 (zero) due to excess capacity. Use this information to answer the following questions:
An agreement between Nextflix and Flixbuster to each supply 250 subscriptions is an example of

A) price discrimination.
B) Bertrand competition.
C) price leadership.
D) collusion.
E) increasing marginal costs.

Question 23

Firm A and Firm B are duopolists.They are choosing the price at which they will sell their products and the quantity they will sell.Both firms make their decisions simultaneously.The ________ equilibrium in this situation occurs when Firm B chooses a pricing strategy given the strategy that Firm A chooses,and Firm A chooses a pricing strategy given the strategy that Firm B chooses.

A) antitrust
B) Nash
C) Von Neumman
D) Morgenstern
E) cartel

Question 24

Assume all markets are in long-run equilibrium.The market quantity supplied in a duopoly would be ________ the market quantity supplied in a monopoly and ________ the market quantity supplied in a competitive market.

A) less than or equal to; less than or equal to
B) less than or equal to; greater than or equal to
C) less than; equal to
D) greater than; equal to
E) greater than or equal to; less than or equal to

Question 25

Assume all markets are in long-run equilibrium.Market price in a duopoly would be ________ the market price in a monopoly,and ________ the market price in a competitive market.

A) less than or equal to; less than or equal to
B) less than or equal to; greater than or equal to
C) less than; equal to
D) greater than; equal to
E) greater than or equal to; less than or equal to

Question 26

The following table shows a small community’s demand for monthly subscriptions to a streaming movie service. Assume that only two firms (Nextflix and Flixbuster) sell in this market, that each firm offers the same quality of service and movie selection, and that each firm’s marginal cost is constant and equal to 0 (zero) due to excess capacity. Use this information to answer the following questions:
If this market were a monopoly instead of a duopoly,the market price would be ________ and the quantity of streaming movie subscriptions purchased each month would be ________.

A) $0; 1,000
B) $3; 700
C) $5; 500
D) $7; 300
E) $9; 100

Question 27

A ________ agreement among rival firms will most likely specify the price each firm will charge and the quantity each firm will produce/sell.

A) friendly
B) competitive
C) monopolistic
D) collusive
E) price-quantity

Question 28

The following table shows a small community’s demand for monthly subscriptions to a streaming movie service. Assume that only two firms (Nextflix and Flixbuster) sell in this market, that each firm offers the same quality of service and movie selection, and that each firm’s marginal cost is constant and equal to 0 (zero) due to excess capacity. Use this information to answer the following questions:
If this market were highly competitive instead of a duopoly,the market price would be __________ and the quantity of streaming movie subscriptions purchased each month would be __________.

A) $0; 1,000
B) $2; 800
C) $4; 600
D) $6; 400
E) $8; 800

Question 29

The following table shows a small community’s demand for monthly subscriptions to a streaming movie service. Assume that only two firms (Nextflix and Flixbuster) sell in this market, that each firm offers the same quality of service and movie selection, and that each firm’s marginal cost is constant and equal to 0 (zero) due to excess capacity. Use this information to answer the following questions:
Listed below are four different collusive agreements that Nextflix and Flixbuster are considering.Assuming both firms will abide by the terms,which collusive agreement(s)would maximize total profit in the market?
I.Nextflix supplies 50 subscriptions and Flixbuster supplies 450 subscriptions.
II.Nextflix supplies 450 subscriptions and Flixbuster supplies 50 subscriptions.
III.Nextflix supplies 300 subscriptions and Flixbuster supplies 100 subscriptions.
IV.Nextflix supplies 100 subscriptions and Flixbuster supplies 100 subscriptions.

A) agreement I
B) agreements I and II
C) agreements II and III
D) agreement III
E) agreements III and IV

Question 30

An agreement between Nike and Adidas to raise prices of the track shoes that each company produces by 50 percent is an example of a collusive agreement,and economists generally agree that

A) this agreement is in the best interest of society because the price of track shoes is significantly above marginal cost.
B) this agreement is in the best interest of society because the quantity of track shoes bought and sold is significantly less than the quantity that would be bought and sold in a perfectly competitive market.
C) this agreement is not in the best interest of society because the price of track shoes is significantly below marginal cost.
D) this agreement is not in the best interest of society because the price of track shoes is significantly above marginal cost.
E) the price of track shoes does not affect societal welfare.

Question 31

In the United States,________ laws prohibit collusion between rivals.

A) competitive arbitration
B) immigration
C) anticompetition
D) union
E) antitrust

Question 32

When two or more firms form a ________ agreement and set price and quantity in unison,economists refer to them as ________.

A) competitive; a cartel
B) collusive; social benefactors
C) collusive; a cartel
D) monopolistically competitive; social benefactors
E) monopolistically competitive; a cartel

Question 33

The following table shows a small community’s demand for monthly subscriptions to a streaming movie service. Assume that only two firms (Nextflix and Flixbuster) sell in this market, that each firm offers the same quality of service and movie selection, and that each firm’s marginal cost is constant and equal to 0 (zero) due to excess capacity. Use this information to answer the following questions:
If the two firms operating in this market agreed to each supply one-half of the quantity a monopolist would supply,the contract would specify that

A) Nextflix supplies 400 subscriptions and Flixbuster supplies 100 subscriptions.
B) Flixbuster supplies 400 subscriptions and Nextflix supplies 100 subscriptions.
C) Nextflix supplies 0 (zero)subscriptions and Flixbuster supplies 500 subscriptions.
D) Flixbuster supplies 0 (zero)subscriptions and Nextflix supplies 500 subscriptions.
E) Nextflix supplies 250 subscriptions and Nextflix supplies 250 subscriptions.

Question 34

If antitrust laws did not prohibit efforts to restrict competition in markets,then

A) no firms would attempt to collude on price and/or quantity.
B) attempts at collusion with rival firms on price and or/quantity would succeed all the time.
C) attempts at collusion with rival firms would probably often fail.
D) all firms in the economy would earn negative economic profit in the long run.
E) all firms in the market would earn zero economic profit in the long run.

Question 35

The following table shows a small community’s demand for monthly subscriptions to a streaming movie service. Assume that only two firms (Nextflix and Flixbuster) sell in this market, that each firm offers the same quality of service and movie selection, and that each firm’s marginal cost is constant and equal to 0 (zero) due to excess capacity. Use this information to answer the following questions:
The following list includes four different collusive agreements that Nextflix and Flixbuster are considering.Assuming both firms will abide by the terms,which collusive agreement(s)would maximize total profit in the market?
I.Nextflix supplies 400 subscriptions and Flixbuster supplies 500 subscriptions.
II.Nextflix supplies 500 subscriptions and Flixbuster supplies 300 subscriptions.
III.Nextflix supplies 250 subscriptions and Flixbuster supplies 250 subscriptions.
IV.Nextflix supplies 100 subscriptions and Flixbuster supplies 400 subscriptions.

A) agreement I
B) agreements I and II
C) agreements II and III
D) agreement IV
E) agreements III and IV

Question 36

Airline A and Airline B are the two largest airlines in the country.The chief executive officer of Airline A calls the chief executive officer of Airline B and says,"Why don't we both raise prices 25 percent across the board next week?" This is an example of

A) spirited competition.
B) attempted collusive behavior.
C) predatory pricing.
D) a corporate merger.
E) a tying arrangement.

Question 37

The ________ effect occurs when the market price either decreases or increases by the respective entrance or exit of a rival firm in the market.

A) competitive
B) price
C) output
D) market
E) oligopoly

Question 38

Oligopolistic markets are socially ________ because price is ________ marginal cost.

A) efficient; equal to
B) efficient; less than
C) efficient; greater than
D) inefficient; less than
E) inefficient; greater than

Question 39

When a market is characterized by mutual interdependence

A) one firm's pricing decision does not affect the market share of any other firm.
B) one firm's quantity decision does not affect the market share of any other firm.
C) all firms always act in unison to produce the monopoly quantity.
D) the actions of one firm have an impact on the price and output of its competitors.
E) the actions of one firm have no impact on the price and output decisions of its competitors.

Question 40

When a third firm enters a market that was previously categorized as a duopoly,the equilibrium price will ________ and the equilibrium quantity will ________.

A) be lower; be lower
B) be higher; be lower
C) be lower; be higher
D) be higher; be higher
E) not change; not change

Question 41

Refer to the following table.Confessing is Eddie's dominant strategy because

A) Sharon's dominant strategy is to keep quiet.
B) he spends more time in jail if he confesses,regardless of whether Sharon confesses or keeps quiet.
C) he spends less time in jail if he confesses,regardless of whether Sharon confesses or keeps quiet.
D) he spends the same amount of time in jail by confessing as he would by not confessing.
E) his decision does not depend on Sharon's decision.

Question 42

Five firms are currently producing and selling in a market.When two more firms enter the market,economists expect that the equilibrium price will ________ and the equilibrium quantity will ________.

A) be lower; be lower
B) be higher; be lower
C) be lower; be higher
D) be higher; be higher
E) not change; not change

Question 43

The following table shows two firms in a duopoly.Each firm makes its decision without knowledge of the other firm's decision.The payoffs for each firm represent economic profits,and each firm strictly prefers more economic profit than less.In this game,selling ________ subscriptions a month is a dominant strategy for Flixbuster and selling ________ subscriptions a month is a dominant strategy for Nextflix.

A) 200; 200
B) 200; 400
C) 400; 200
D) 400; 400
E) 100; 100

Question 44

Refer to the following table.Assume that Keisha keeps quiet.Larry will spend ________ years in jail if he confesses,and ________ years in jail if he also keeps quiet.

A) 12; 1.5
B) 1.5; 12
C) 0; 12
D) 12; 12
E) 0; 1.5

Question 45

Refer to the following table.In the Nash equilibrium of this game,Derrick will go to jail for ________ years and Brandy will go to jail for ________ years.

A) 0.5; 0.5
B) 25; 25
C) 0.5; 18
D) 0.5; 25
E) 18; 18

Question 46

When a particular strategy produces a better outcome for a person regardless of the strategies others choose,we say it is a(n)

A) dominated strategy.
B) dominant strategy.
C) equilibrated strategy.
D) efficient strategy.
E) surplus maximization strategy.

Question 47

Refer to the following table.Assume that Jeff confesses.Gerry will spend ________ years in jail if he also confesses,and ________ years in jail if he keeps quiet.

A) 15; 15
B) 35; 35
C) 0; 35
D) 35; 0
E) 15; 35

Question 48

The following table depicts two firms in a single-stage duopoly game.Each firm makes its decision without knowledge of the other firm's decision.The payoffs for each firm represent economic profits,and each firm strictly prefers more economic profit than less.If X is greater than $3,500,then there is/are

A) only one Nash equilibrium,and this game would be considered a prisoner's dilemma.
B) two Nash equilibriums,and this game would be considered a prisoner's dilemma.
C) three Nash equilibriums,and this game would be considered a prisoner's dilemma.
D) only one Nash equilibrium,and this game would not be considered a prisoner's dilemma.
E) two Nash equilibriums,and this game would not be considered a prisoner's dilemma.

Question 49

Walmart and Target are the only stores in a remote town that currently stock and sell the PlayStation 5 video game console.Managers at both stores are simultaneously deciding whether to charge a price of $1,000 or $1,500 for each console.If both stores charge $1,000,they earn a profit of $100,000 each.If both stores charge $1,500,they earn a profit of $200,000 each.If one store charges $1,000 and the other store charges $1,500,the store that charges $1,000 earns a profit of $250,000 and the firm that charges $1,500 earns a profit of $50,000.If Walmart and Target ________,they can both charge $1,500 and earn the highest combined profit available.

A) collude with each other
B) privately undercut each other after making an agreement
C) engage in spirited price competition
D) compete with each other only with regard to quantity and not price
E) compete with each other only with regard to price and not quantity

Question 50

The Nash equilibrium in an oligopolistic market is generally ________ for society than the outcome under collusion because the price is ________ marginal cost.

A) better; closer to
B) better; further above
C) worse; closer to
D) worse; further above
E) worse; equal to

Question 51

The following table shows two firms in a single-stage duopoly game.Each firm makes its decision without knowledge of the other firm's decision.The payoffs for each firm represent economic profits,and each firm strictly prefers more economic profit than less.Assume the firms are not able to collude.The Nash equilibrium total quantity of potatoes on the market is

A) 12,000.
B) 4,000.
C) 10,000.
D) 14,000.
E) 24,000.

Question 52

The following table shows two firms in a single-stage duopoly game.Each firm makes its decision without knowledge of the other firm's decision.The payoffs for each firm represent economic profits,and each firm strictly prefers more economic profit than less.This game would be considered a prisoner's dilemma if X is between

A) $10,000 and $25,000.
B) $25,000 and $35,000.
C) $10,000 and $35,000.
D) $35,000 and $70,000.
E) $45,000 and $70,000.

Question 53

The following table shows two firms in a single-stage duopoly game.Each firm makes its decision without knowledge of the other firm's decision.The payoffs for each firm represent economic profits,and each firm strictly prefers more economic profit than less.If both firms were able to write a binding contract,this contract would specify that Bobbles.com agrees to produce ________ bobbleheads and Bobbles R' Us agrees to produce ________ bobbleheads.

A) 5,000; 7,000
B) 7,000; 5,000
C) 7,000; 7,000
D) 5,000; 5,000
E) 12,000; 0

Question 54

In January 2011,Coca-Cola and Pepsi agreed to reduce their yearly advertising budgets by $1 million each,and neither firm reneged on the agreement throughout the year.In January 2012,Coca-Cola and Pepsi each announced that its company 2011 profits had increased by $1 million.Which of the following is a likely explanation for this increase?

A) A new entrant in the market caused Coca-Cola and Pepsi to lose substantial market share.
B) The government imposed a punitive tax on both firms for producing a beverage that is a danger to public health.
C) The firms had previously been in a prisoner's dilemma situation where one firm's advertisements were effectively canceling the other firm's advertisements.
D) Coca-Cola drastically reduced the price of its soda relative to the price of Pepsi's soda.
E) Pepsi drastically reduced the price of its soda relative to the price of Coca-Cola's soda.

Question 55

The following table shows two firms in a duopoly.Each firm makes its decision without knowledge of the other firm's decision.The payoffs for each firm represent economic profits,and each firm strictly prefers more economic profit than less.If both firms were able to collude and make their supply decisions collectively,Flixbuster would sell ________ subscriptions per month and Nextflix would sell ________ subscriptions per month.

A) 200; 200
B) 400; 400
C) 400; 200
D) 200; 400
E) 600; 600

Question 56

Six firms are currently producing and selling in a market.When two of the six firms exit the market,economists expect that the equilibrium price will ________ and the equilibrium quantity will ________.

A) be lower; be lower
B) be higher; be lower
C) be lower; be higher
D) be higher; be higher
E) not change; not change

Question 57

Which of the following is an example of collusion?

A) Nike and Reebok compete on price.
B) Dell and Gateway compete on quantity.
C) American Airlines and United Airlines agree to raise prices.
D) Coca-Cola and Pepsi do not attempt to fix prices.
E) Verizon builds more cell phone towers.

Question 58

Together,Coca-Cola and Pepsi account for approximately ________ percent of the soft drink market.

A) 35
B) 45
C) 55
D) 65
E) 75

Question 59

If two duopolists arrive at the Nash equilibrium output level,the total quantity of the good on the market will be ________ the total quantity on the market if the market were perfectly competitive and ________ the total quantity on the market if the market were controlled by a monopoly.

A) less than; less than
B) less than; greater than
C) greater than; greater than
D) greater than; less than
E) greater than; equal to

Question 60

Three firms are currently producing and selling in a market.When one of the three firms exits the market,economists expect that the equilibrium price will ________ and the equilibrium quantity will ________.

A) be lower; be lower
B) be higher; be lower
C) be lower; be higher
D) be higher; be higher
E) not change; not change

Question 61

________ have dominant strategies that make player decisions easy to predict.

A) All games
B) Only prisoner's dilemma games
C) Only two types of games
D) Only games involving firms
E) Not all games

Question 62

In January,Home Depot offered a 10 percent-off coupon and Lowe's did not.In February,Lowe's offered a 10 percent-off coupon and Home Depot did not.In March,Home Depot offered a 10 percent-off coupon and Lowe's did not.It is likely that Home Depot and Lowe's are both playing the ________ strategy.

A) grim trigger
B) tit-for-two-tats
C) deterrence
D) tit-for-tat
E) mutually assured destruction

Question 63

In the airline industry,it is common to see one airline changing the airfare (price)between two cities and other airlines either matching the price or actively deciding not to change their prices.What type of game can describe this situation?

A) nonbargaining
B) nonsequential
C) bargaining
D) sequential
E) tit for tat

Question 64

A business decision best understood with a sequential game is whether or not to

A) offer employees an early retirement package.
B) merge with a competing firm.
C) start an advertising campaign for a new product.
D) stop producing an unprofitable product.
E) shut down.

Question 65

The following payoff matrix depicts the possible outcomes for two players involved in a game of Rock,Paper,Scissors.If a player receives a payoff of 1,the player wins; if the player receives a payoff of -1,the player loses; if both players receive 0 (zero),the players tie.If Evan chooses rock and Lisbeth chooses paper,Evan's payoff is ________ and Lisbeth's payoff is ________.

A) 0; 0
B) 1; 0
C) 2; 0
D) -1; 1
E) 1; 1

Question 66

Jaheim and Suzanna are playing a game involving repeated iterations of a simultaneous-move prisoner's dilemma.In each round,both players choose either "cooperate" or "defect." Neither Jaheim nor Suzanna knows when the game will end.If Jaheim believes that Suzanna will be playing tit for tat,then

A) he will maximize his payoffs by defecting in every round.
B) cooperation will be impossible to maintain regardless of the strategy he plays.
C) cooperation might be possible if he also plays tit for tat.
D) cooperation might be possible if he plays a strategy where he defects in every round.
E) cooperation might be possible if he plays a strategy where he defects in the first round,cooperates in the second round,and defects in every other round.

Question 67

Game theorist Robert Axelrod decided to examine the choices that participants make in a long-run setting.He ran a sophisticated computer simulation in which he invited scholars to submit strategies for securing points in a prisoner's dilemma tournament over many rounds.All the submissions were collected and paired,and the results were scored.After each simulation,he eliminated the weakest strategy and reran the tournament with the remaining strategies.This evolutionary approach continued until the best strategy remained.Among all strategies submitted,which strategy dominated?

A) tit-for-tat strategy
B) tit-for-two-tats strategy
C) Axelrod equivalency strategy
D) profit-maximization strategy
E) grim trigger

Question 68

The following table shows two firms in a single-stage game.Each firm makes its decision without knowledge of the other firm's decision.The payoffs for each firm represent economic profits,and each firm strictly prefers more economic profit than less.In the Nash equilibrium of this game,Pepsi earns a profit of ________ and Coca-Cola earns a profit of ________.

A) $67.5 million; $67.5 million
B) $30 million; $30 million
C) $37.5 million; $75 million
D) $75 million; $37.5 million
E) $50 million; $50 million

Question 69

Player A and Player B are playing a game involving several rounds of a prisoner's dilemma where their choices are to "cooperate" or "defect." After each round ends,one player rolls a six-sided die.If the die lands on 6,the game ends; however,if the die lands on any other number,the game continues and players play another round.Prior to the game starting,the players formulate a strategy that specifies what they will do in every possible round they might find themselves in.If Player A is playing the tit-for-tat strategy,in the ________ round,Player A will definitely choose ________.

A) first; defect
B) second; defect
C) first; cooperate
D) second; cooperate
E) third; cooperate

Question 70

In a repeated prisoner's dilemma,a player who is playing tit for tat will

A) defect in the first round and defect in all subsequent rounds.
B) defect in the first round and,in any subsequent round,do what his or her opponent did in the last round.
C) cooperate in the first round and defect in all subsequent rounds.
D) cooperate in the first round and cooperate in all subsequent rounds.
E) cooperate in the first round and,in any subsequent round,do what his or her opponent did in the last round.

Question 71

In January,Walmart offered a 10 percent-off coupon and Target did not.In February,Target offered a 10 percent-off coupon and Walmart did not.In March,Walmart offered a 10 percent-off coupon and Target did not.It is likely that Walmart and Target are both playing the ________ strategy.

A) grim trigger
B) tit-for-two-tats
C) retail retaliation
D) tit-for-tat
E) mutually assured destruction

Question 72

The following payoff matrix depicts the possible outcomes for two players involved in a game of Rock,Paper,Scissors.If a player receives a payoff of 1,the player wins; if the player receives a payoff of-1,the player loses; if both players receive 0 (zero),the players tie.Edward's optimal strategy is to

A) always choose rock because Meg's dominant strategy is to choose paper.
B) choose rock with probability 0.75 and paper with probability 0.25 because Meg will choose paper with probability 0.50 and rock with probability 0.50.
C) always choose paper because Meg's dominant strategy is to choose rock.
D) choose rock with probability 0.33,paper with probability 0.33,and scissors with probability 0.33 because Meg's dominant strategy is to choose paper.
E) choose rock with probability 0.33,paper with probability 0.33,and scissors with probability 0.33 because neither he nor Meg has a dominant strategy.

Question 73

The following payoff matrix depicts the possible outcomes for two players involved in a game of volleyball. At this point in the game, the ball has just been hit to Deidra, and she chooses whether to hit right or hit left. At the same time, Ashley chooses whether to jump right (Deidra’s right) or jump left (Deidra’s left). If a player receives a payoff of 1, the player wins the point; if the player receives a payoff of –1, the player loses the point. Use this information to answer the following questions:
How many Nash equilibrium(s)exist in this game?

A) zero
B) one
C) two
D) three
E) four

Question 74

Sequential games best understand a situation where

A) one firm acts and the other firm responds later.
B) one firm acts and the other firm responds at the same time.
C) the firms are in a cartel.
D) the firm is a monopoly.
E) there is a prisoner's dilemma.

Question 75

The following payoff matrix depicts the possible outcomes for two players involved in a game of Rock,Paper,Scissors.If a player receives a payoff of 1,the player wins; if the player receives a payoff of -1,the player loses; if both players receive 0 (zero),the players tie.If Stan chooses scissors and Tyrell chooses rock,Stan's payoff is ________ and Tyrell's payoff is ________.

A) 0; 0
B) 1; 0
C) -1; 1
D) 0; 1
E) 1; 1

Question 76

The following payoff matrix depicts the possible outcomes for two players involved in a game of Rock,Paper,Scissors.If a player receives a payoff of 1,the player wins; if the player receives a payoff of -1,the player loses; if both players receive 0 (zero),the players tie.If Marcus chooses scissors and Gillian chooses paper,Marcus's payoff is ________ and Gillian's payoff is ________.

A) 0; 0
B) 1; 0
C) 2; 0
D) -1; 1
E) 1;-1

Question 77

Player A and Player B are playing a game involving several rounds of a prisoner's dilemma where their choices are to "cooperate" or "defect." After each round ends,one player rolls a six-sided die.If the die lands on 6,the game ends; however,if the die lands on any other number,the game continues and players play another round.Prior to the game starting,the players formulate a strategy that specifies what they will do in every possible round they might find themselves in.If Player A is playing the tit-for-tat strategy,in the ________ round,Player A will ________.

A) first; definitely choose defect.
B) second; definitely choose defect.
C) second; choose whatever Player B chose in the first round.
D) second; definitely choose cooperate.
E) third; definitely choose cooperate.

Question 78

The following payoff matrix depicts the possible outcomes for two players involved in a game of volleyball. At this point in the game, the ball has just been hit to Deidra, and she chooses whether to hit right or hit left. At the same time, Ashley chooses whether to jump right (Deidra’s right) or jump left (Deidra’s left). If a player receives a payoff of 1, the player wins the point; if the player receives a payoff of –1, the player loses the point. Use this information to answer the following questions:

-If Deidra hits left and Ashley jumps right,Ashley receives a payoff of ________ and Deidra receives a payoff of ________.

A) -1; 1
B) -1; -1
C) 1; 1
D) 1; -1
E) 0; 0

Question 79

The accompanying payoff matrix depicts the possible outcomes for two players involved in a game of Rock,Paper,Scissors.If a player receives a payoff of 1,the player wins; if the player receives a payoff of -1,the player loses; if both players receive 0 (zero),the players tie.If Timothy chooses paper and Ernesto chooses paper,Timothy's payoff is ________ and Ernesto's payoff is ________.

A) 0; 0
B) 1; 0
C) 2; 0
D) 0; 1
E) 1; 1

Question 80

The following payoff matrix depicts the possible outcomes for two players involved in a game of Left,Center,Right.If a player receives a payoff of 1,the player wins; if the player receives a payoff of -1,the player loses; if both players receive 0 (zero),the players tie.There is/are ________ Nash equilibrium(s)in this game.

A) zero
B) one
C) two
D) three
E) four