Deck 18: Game Theory and Strategic Choices
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Deck 18: Game Theory and Strategic Choices
1
An interaction between two or more persons is considered a strategic interaction when:
A)all people involved are working together to achieve a common goal best achieved through joint action.
B)all people involved have a clear path or action that will give them optimal results regardless of what any other person chooses.
C)there is no optimum result possible for anyone in the group, so each person tries to avoid a worst-case scenario.
D)an individual's best choice may depend on what the others choose, and others' best choice may depend on what the individual chooses.
A)all people involved are working together to achieve a common goal best achieved through joint action.
B)all people involved have a clear path or action that will give them optimal results regardless of what any other person chooses.
C)there is no optimum result possible for anyone in the group, so each person tries to avoid a worst-case scenario.
D)an individual's best choice may depend on what the others choose, and others' best choice may depend on what the individual chooses.
D
2
Which of the following terms denotes a situation in which an individual's best choice may depend on what others choose, and others' best choice may depend on what the individual chooses?
A)comparative advantage
B)strategic interaction
C)coordination interaction
D)partial equilibrium
A)comparative advantage
B)strategic interaction
C)coordination interaction
D)partial equilibrium
B
3
The science of making good decisions in situations involving strategic interactions is called:
A)game theory.
B)interaction analysis.
C)focal point analysis.
D)strategic interdependency.
A)game theory.
B)interaction analysis.
C)focal point analysis.
D)strategic interdependency.
A
4
Game theory is:
A)a view on the development of children's games and toys.
B)the analysis of market forces when there is role reversal for buyers and sellers.
C)the science of making good decisions in situations involving strategic interactions.
D)a view on decision making when clear paths to optimum outcomes are known.
A)a view on the development of children's games and toys.
B)the analysis of market forces when there is role reversal for buyers and sellers.
C)the science of making good decisions in situations involving strategic interactions.
D)a view on decision making when clear paths to optimum outcomes are known.
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5
When an individual's best choice may depend on what other people choose and other people's best choices may depend on what the individual chooses, then _____ is the science that is useful to help the decision makers analyze their options.
A)strategic interaction theory
B)game theory
C)analytical strategy
D)partial equilibrium analysis
A)strategic interaction theory
B)game theory
C)analytical strategy
D)partial equilibrium analysis
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6
Game theory is helpful in analyzing situations in which there is _____ the decision makers.
A)dominance by one of
B)independence across all
C)unequal information across
D)interdependence between
A)dominance by one of
B)independence across all
C)unequal information across
D)interdependence between
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7
"Playing games" is another term for engaging in:
A)strategic interactions.
B)independent actions.
C)rivalry investments.
D)alternative theory.
A)strategic interactions.
B)independent actions.
C)rivalry investments.
D)alternative theory.
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8
How common are strategic interactions and games in people's lives?
A)They are rare, occurring only a few times in a lifetime.
B)They occur occasionally, perhaps every few years.
C)They are somewhat frequent, occurring perhaps every six to 12 months.
D)They are a pervasive part of life that occur daily or weekly.
A)They are rare, occurring only a few times in a lifetime.
B)They occur occasionally, perhaps every few years.
C)They are somewhat frequent, occurring perhaps every six to 12 months.
D)They are a pervasive part of life that occur daily or weekly.
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9
A basic logic that applies to all strategic interactions is:
A)making a good choice requires that you anticipate what others will do.
B)action should not be taken until there is a clear best choice.
C)risk must be eliminated.
D)games should be avoided, so that decisions can be based on facts.
A)making a good choice requires that you anticipate what others will do.
B)action should not be taken until there is a clear best choice.
C)risk must be eliminated.
D)games should be avoided, so that decisions can be based on facts.
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10
Which of the following is NOT one of the four steps for making good strategic decisions?
A)Consider all the possible outcomes.
B)Consider all the possible "what ifs" simultaneously.
C)Play your best response.
D)Put yourself in other people's shoes.
A)Consider all the possible outcomes.
B)Consider all the possible "what ifs" simultaneously.
C)Play your best response.
D)Put yourself in other people's shoes.
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11
Which of the following is NOT one of the four steps for making good strategic decisions?
A)Consider only the most favorable outcomes.
B)Think about the "what ifs" separately.
C)Play your best response.
D)Put yourself in other people's shoes.
A)Consider only the most favorable outcomes.
B)Think about the "what ifs" separately.
C)Play your best response.
D)Put yourself in other people's shoes.
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12
Which of the following is NOT one of the four steps for making good strategic decisions?
A)Consider all the possible outcomes.
B)Think about the "what ifs" separately.
C)Do what others don't expect you to do.
D)Put yourself in other people's shoes.
A)Consider all the possible outcomes.
B)Think about the "what ifs" separately.
C)Do what others don't expect you to do.
D)Put yourself in other people's shoes.
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13
Which of the following is NOT one of the four steps for making good strategic decisions?
A)Consider all the possible outcomes.
B)Think about the "what ifs" separately.
C)Play your best response.
D)Assume that others will defer to your action.
A)Consider all the possible outcomes.
B)Think about the "what ifs" separately.
C)Play your best response.
D)Assume that others will defer to your action.
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14
A payoff table lists all possible _____, with a row for each _____ and a column for _____.
A)outcomes; of one player's possible outcomes; each of the other player's possible outcomes
B)costs; fixed cost; each variable cost
C)rivals; possible rival; each outcome resulting from competing against each rival
D)outcomes; possible negative outcome; each possible positive outcome
A)outcomes; of one player's possible outcomes; each of the other player's possible outcomes
B)costs; fixed cost; each variable cost
C)rivals; possible rival; each outcome resulting from competing against each rival
D)outcomes; possible negative outcome; each possible positive outcome
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15
Two people have an interactive relationship. A table that has a row for each possible outcome for one person and a column for each possible outcome for the other person is called:
A)an outcome matrix.
B)an interaction table.
C)a game matrix.
D)a payoff table.
A)an outcome matrix.
B)an interaction table.
C)a game matrix.
D)a payoff table.
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16
Use the table about Hikaru and his parents to answer the question.
What is this kind of table called?
A)an outcome matrix
B)an interaction table
C)a payoff table
D)a game matrix
What is this kind of table called?
A)an outcome matrix
B)an interaction table
C)a payoff table
D)a game matrix
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17
Use the table about Hikaru and his parents to answer the question.
Hikaru wants to graduate from college as soon as possible after high school and begin his career with his personal finances as sound and debt-free as possible. Hikaru's best option to achieve this goal is _____ work part-time in high school if his parents pay his tuition and _____ work part-time in high school if his parents do not pay his tuition.
A)to; not to
B)to; to
C)not to; not to
D)not to; to
Hikaru wants to graduate from college as soon as possible after high school and begin his career with his personal finances as sound and debt-free as possible. Hikaru's best option to achieve this goal is _____ work part-time in high school if his parents pay his tuition and _____ work part-time in high school if his parents do not pay his tuition.
A)to; not to
B)to; to
C)not to; not to
D)not to; to
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18
When looking at a payoff table, what does it mean to "Put yourself in someone else's shoes"?
A)Look at the other party's options to see if those options are better than yours.
B)Negotiate with the other party to switch places with that party.
C)Try to take on the roles of both parties to determine which choices lead to the best of all possible outcomes.
D)Figure out what decision the other party is likely to make, given the other party's incentives.
A)Look at the other party's options to see if those options are better than yours.
B)Negotiate with the other party to switch places with that party.
C)Try to take on the roles of both parties to determine which choices lead to the best of all possible outcomes.
D)Figure out what decision the other party is likely to make, given the other party's incentives.
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19
Use the table with data for Maria and Jose to answer the question.
If Maria charges $8, then Jose's best option would be to charge_____ in order to earn _____.
A)$4; $280
B)$4; $180
C)$8; $180
D)$8; $40
If Maria charges $8, then Jose's best option would be to charge_____ in order to earn _____.
A)$4; $280
B)$4; $180
C)$8; $180
D)$8; $40
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20
Use the table with data for Maria and Jose to answer the question.
If Jose charges $8, then Maria's best price would be _____, and she would earn _____
A)$8; $200
B)$8; $50
C)$4; $300
D)$4; $180
If Jose charges $8, then Maria's best price would be _____, and she would earn _____
A)$8; $200
B)$8; $50
C)$4; $300
D)$4; $180
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21
Use the table with data for Maria and Jose to answer the question.
If Maria charges $4, then Jose's best option would be to charge _____ in order to earn _____.
A)$8; $180
B)$8; $280
C)$4; $40
D)$4; $150
If Maria charges $4, then Jose's best option would be to charge _____ in order to earn _____.
A)$8; $180
B)$8; $280
C)$4; $40
D)$4; $150
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22
Use the table with data for Maria and Jose to answer the question.
If Jose charges $4, then Maria's best option would be to charge _____ in order to earn _____.
A)$8; $200
B)$8; $50
C)$4; $300
D)$4; $180
If Jose charges $4, then Maria's best option would be to charge _____ in order to earn _____.
A)$8; $200
B)$8; $50
C)$4; $300
D)$4; $180
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23
Use the table with data for Maria and Jose to answer the question.
If Jose charges $8, Maria should charge _____. If Jose charges $4, Maria should charge _____.
A)$8; $8
B)$8; $4
C)$4; $8
D)$4; $4
If Jose charges $8, Maria should charge _____. If Jose charges $4, Maria should charge _____.
A)$8; $8
B)$8; $4
C)$4; $8
D)$4; $4
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24
Use the table with data for Maria and Jose to answer the question.
If Maria charges $8, the Jose should charge _____. If Maria charges $4, then Jose should charge _____.
A)$4; $4
B)$4; $8
C)$8; $4
D)$8; $8
If Maria charges $8, the Jose should charge _____. If Maria charges $4, then Jose should charge _____.
A)$4; $4
B)$4; $8
C)$8; $4
D)$8; $8
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25
Use the table with data for Maria and Jose to answer the question.
Maria is most likely to charge a price of _____, and Jose is most likely to charge a price of _____.
A)$4; $4
B)$4; $8
C)$8; $4
D)$8; $8
Maria is most likely to charge a price of _____, and Jose is most likely to charge a price of _____.
A)$4; $4
B)$4; $8
C)$8; $4
D)$8; $8
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26
Use the table with data for Vlad and Assad to answer the question.
If Assad charges $1, then Vlad should charge _____. If Assad charges $3, then Vlad should charge _____.
A)$3; $3
B)$3; $1
C)$1; $3
D)$1; $1
If Assad charges $1, then Vlad should charge _____. If Assad charges $3, then Vlad should charge _____.
A)$3; $3
B)$3; $1
C)$1; $3
D)$1; $1
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27
Use the table with data for Vlad and Assad to answer the question.
With no cooperation, the most likely outcome is that Vlad will charge _____, and Assad will charge _____.
A)$1; $1
B)$1; $3
C)$3; $1
D)$3; $3
With no cooperation, the most likely outcome is that Vlad will charge _____, and Assad will charge _____.
A)$1; $1
B)$1; $3
C)$3; $1
D)$3; $3
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28
Use the table with data for Vlad and Assad to answer the question.
If Vlad charges $1, then Assad should charge _____. If Vlad charges $3, then Assad should charge _____.
A)$1, $1
B)$1; $3
C)$3; $1
D)$3; $3
If Vlad charges $1, then Assad should charge _____. If Vlad charges $3, then Assad should charge _____.
A)$1, $1
B)$1; $3
C)$3; $1
D)$3; $3
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29
Use the table with data for Tasha and Hui Er to answer the question.
Tasha tries to put herself in Hui Er's shoes. Tasha concludes that if she (Tasha) charges $5, then Hui Er will charge _____ to earn a profit of _____.
A)$5; $3,000
B)$5; $700
C)$9; $6,000
D)$9; $5,000
Tasha tries to put herself in Hui Er's shoes. Tasha concludes that if she (Tasha) charges $5, then Hui Er will charge _____ to earn a profit of _____.
A)$5; $3,000
B)$5; $700
C)$9; $6,000
D)$9; $5,000
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30
Use the table with data for Tasha and Hui Er to answer the question.
Tasha tries to put herself in Hui Er's place. Tasha concludes that if she (Tasha), charges $9, then Hui Er will charge _____ to earn a profit of _____.
A)$9; $3,000
B)$9; $700
C)$5; $6,000
D)$5; $5,000
Tasha tries to put herself in Hui Er's place. Tasha concludes that if she (Tasha), charges $9, then Hui Er will charge _____ to earn a profit of _____.
A)$9; $3,000
B)$9; $700
C)$5; $6,000
D)$5; $5,000
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31
Use the table with data for Tasha and Hui Er to answer the question.
With no cooperation, the most likely outcome is that Tasha will charge _____, and Hui Er will charge _____.
A)$5; $5
B)$5; $9
C)$9; $5
D)$9; $9
With no cooperation, the most likely outcome is that Tasha will charge _____, and Hui Er will charge _____.
A)$5; $5
B)$5; $9
C)$9; $5
D)$9; $9
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32
Use the table with data for Gizelle and Devin to answer the question.
Gizelle tries to put herself in Devin's place. If she (Gizelle) charges a price of $7, then she thinks that Devin will charge ____ to earn a profit of _____.
A)$6; $2,500
B)$6; $5,000
C)$8; $1,000
D)$8; $4,000
Gizelle tries to put herself in Devin's place. If she (Gizelle) charges a price of $7, then she thinks that Devin will charge ____ to earn a profit of _____.
A)$6; $2,500
B)$6; $5,000
C)$8; $1,000
D)$8; $4,000
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33
Use the table with data for Gizelle and Devin to answer the question.
Gizelle tries to put herself in Devin's place. If she (Gizelle) charges a price of $9, then she thinks that Devin will charge ____ to earn a profit of _____.
A)$6; $2,500
B)$6; $5,000
C)$8; $1,000
D)$8; $4,000
Gizelle tries to put herself in Devin's place. If she (Gizelle) charges a price of $9, then she thinks that Devin will charge ____ to earn a profit of _____.
A)$6; $2,500
B)$6; $5,000
C)$8; $1,000
D)$8; $4,000
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34
Use the table with data for Gizelle and Devin to answer the question.
With no cooperation, the most likely outcome is that Gizelle will charge _____ and Devin will charge _____.
A)$9; $8
B)$9; $6
C)$7; $8
D)$7; $6
With no cooperation, the most likely outcome is that Gizelle will charge _____ and Devin will charge _____.
A)$9; $8
B)$9; $6
C)$7; $8
D)$7; $6
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35
Use the table with data for Gizelle and Devin to answer the question.
Devin tries to put himself in Gizelle's place. He concludes that if he (Devin) charges $8, then Gizelle will charge _____ to earn a profit of _____.
A)$6; $3,000
B)$7; $6,000
C)$8; $4,000
D)$9; $5,000
Devin tries to put himself in Gizelle's place. He concludes that if he (Devin) charges $8, then Gizelle will charge _____ to earn a profit of _____.
A)$6; $3,000
B)$7; $6,000
C)$8; $4,000
D)$9; $5,000
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36
An equilibrium in which the choice that each player makes is a best response to the choices other players are making is the definition of a:
A)strategic equilibrium.
B)Coase theorem solution.
C)Nash equilibrium.
D)game-played solution.
A)strategic equilibrium.
B)Coase theorem solution.
C)Nash equilibrium.
D)game-played solution.
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37
A Nash equilibrium is an equilibrium in which:
A)no trade-offs are made by buyers and sellers.
B)the choice that each player makes is a best response to the choices other players are making.
C)maximum profits are earned by each player, due to cooperative decision making.
D)cooperation between market participants leads to self-serving but nonoptimum results.
A)no trade-offs are made by buyers and sellers.
B)the choice that each player makes is a best response to the choices other players are making.
C)maximum profits are earned by each player, due to cooperative decision making.
D)cooperation between market participants leads to self-serving but nonoptimum results.
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38
If a check mark is put next to each player's best response in a payoff table, then an outcome cell with a check mark from each player is called:
A)a Coase payoff solution.
B)an interaction equilibrium.
C)a game-based solution.
D)a Nash equilibrium.
A)a Coase payoff solution.
B)an interaction equilibrium.
C)a game-based solution.
D)a Nash equilibrium.
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39
A Nash equilibrium can be identified on a payoff table when:
A)a check mark is put next to each player's best response, and there is a cell with a check mark for each player.
B)a check mark is put next to each player's best response, and there is a cell with no check marks in it.
C)one cell contains the highest gain for each player, although it may not be the player's best response.
D)each player has an equilibrium that is opposite that of the other player, so they are not in conflict.
A)a check mark is put next to each player's best response, and there is a cell with a check mark for each player.
B)a check mark is put next to each player's best response, and there is a cell with no check marks in it.
C)one cell contains the highest gain for each player, although it may not be the player's best response.
D)each player has an equilibrium that is opposite that of the other player, so they are not in conflict.
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40
Why is a "Nash equilibrium" called an equilibrium?
A)The market is at maximum profits, with quantity demanded equal to supply.
B)No players can do better by changing his or her own choice alone, so the situation is relatively stable.
C)It overcomes market failure to provide the optimum social welfare outcome.
D)Costs are minimized, and profits are maximized.
A)The market is at maximum profits, with quantity demanded equal to supply.
B)No players can do better by changing his or her own choice alone, so the situation is relatively stable.
C)It overcomes market failure to provide the optimum social welfare outcome.
D)Costs are minimized, and profits are maximized.
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41
Use the table, with data for Gizelle and Devin, to answer the question
Use the check mark method to determine which cell, if any, has a Nash equilibrium, and then choose the correct description.
A)The Nash equilibrium is Gizelle earning profit of $5,000 and Devin earning profit of $4,000.
B)The Nash equilibrium is Gizelle earning profit of $1,000 and Devin earning profit of $5,000.
C)The Nash equilibrium is Gizelle earning profit of $6,000 and Devin earning profit of $1,000.
D)The Nash equilibrium is Gizelle earning profit of $3,000 and Devin earning profit of $2,500.
Use the check mark method to determine which cell, if any, has a Nash equilibrium, and then choose the correct description.
A)The Nash equilibrium is Gizelle earning profit of $5,000 and Devin earning profit of $4,000.
B)The Nash equilibrium is Gizelle earning profit of $1,000 and Devin earning profit of $5,000.
C)The Nash equilibrium is Gizelle earning profit of $6,000 and Devin earning profit of $1,000.
D)The Nash equilibrium is Gizelle earning profit of $3,000 and Devin earning profit of $2,500.
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42
Use the table, with data for Vlad and Assad, to answer the question.
Use the check mark method to determine which cell has a Nash equilibrium. When there is a Nash equilibrium, Vlad earns profits of _____, and Assad earns profits of _____.
A)$3,000; $3,000
B)$3,500; $500
C)$500; $3,500
D)$2,000; $2,000
Use the check mark method to determine which cell has a Nash equilibrium. When there is a Nash equilibrium, Vlad earns profits of _____, and Assad earns profits of _____.
A)$3,000; $3,000
B)$3,500; $500
C)$500; $3,500
D)$2,000; $2,000
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43
Use the table, with data for Tasha and Hui Er, to answer the question.
Use the check mark method to determine which cell contains a Nash equilibrium. Under a Nash equilibrium, Hui Er earns profits of _____, and Tasha earns profits of _____.
A)$6,000; $700
B)$3,000; $3,000
C)$700; $6,000
D)$5,000; $5,000
Use the check mark method to determine which cell contains a Nash equilibrium. Under a Nash equilibrium, Hui Er earns profits of _____, and Tasha earns profits of _____.
A)$6,000; $700
B)$3,000; $3,000
C)$700; $6,000
D)$5,000; $5,000
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44
Which of the following statements is FALSE regarding a Nash equilibrium?
A)Each player's expectation of the other player's strategy is correct.
B)Cooperation between the players could not improve the outcome.
C)All players choose their best response to the strategy they expect the other player will choose.
D)No player can do better by unilaterally changing his or her choice.
A)Each player's expectation of the other player's strategy is correct.
B)Cooperation between the players could not improve the outcome.
C)All players choose their best response to the strategy they expect the other player will choose.
D)No player can do better by unilaterally changing his or her choice.
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45
Which of the following statements regarding a Nash equilibrium is TRUE?
A)Cooperation between players could not improve the outcome.
B)All players choose their overall best response without regard to the other player's likely choice.
C)No player can do better by unilaterally changing his or her choice.
D)Each player's expectation of the other player's choice is often incorrect.
A)Cooperation between players could not improve the outcome.
B)All players choose their overall best response without regard to the other player's likely choice.
C)No player can do better by unilaterally changing his or her choice.
D)Each player's expectation of the other player's choice is often incorrect.
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46
Agreements to cooperate among players in a game are:
A)expected.
B)common.
C)not credible.
D)reliable.
A)expected.
B)common.
C)not credible.
D)reliable.
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47
The Prisoner's Dilemma shows how markets:
A)deliver the best possible outcomes.
B)are based on collusive agreements in most cases.
C)can deliver bad outcomes.
D)minimize costs.
A)deliver the best possible outcomes.
B)are based on collusive agreements in most cases.
C)can deliver bad outcomes.
D)minimize costs.
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48
Markets under _____ deliver efficient outcomes; markets with _____ deliver inefficient outcomes.
A)perfect competition; strategic interactions
B)strategic interactions; perfect competition
C)limited rivalry; strong rivalry
D)strong rivalry; limited rivalry
A)perfect competition; strategic interactions
B)strategic interactions; perfect competition
C)limited rivalry; strong rivalry
D)strong rivalry; limited rivalry
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49
While _____ markets do not necessarily lead to efficient outcomes, _____ markets tend to yield efficient outcomes.
A)Strategic; prisoner-based
B)Prisoner-based; strategic
C)Competitive; strategic interactions in
D)Strategic interactions in; competitive
A)Strategic; prisoner-based
B)Prisoner-based; strategic
C)Competitive; strategic interactions in
D)Strategic interactions in; competitive
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50
Why are cooperative agreements rare in markets with strategic interactions?
A)Players have incentives to disregard such agreements.
B)It is too hard to predict what other players will do.
C)There is little to gain because noncooperation yields the best possible outcome.
D)Cooperation entails higher costs.
A)Players have incentives to disregard such agreements.
B)It is too hard to predict what other players will do.
C)There is little to gain because noncooperation yields the best possible outcome.
D)Cooperation entails higher costs.
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51
Use the table with data for Bella and Martin to answer the question.
With no cooperation, the Nash equilibrium yields Bella a profit of _____ and Martin a profit of _____.
A)$6,000; $1,000
B)$4,000; $3,500
C)$5,000; $5,000
D)$1,000; $5,500
With no cooperation, the Nash equilibrium yields Bella a profit of _____ and Martin a profit of _____.
A)$6,000; $1,000
B)$4,000; $3,500
C)$5,000; $5,000
D)$1,000; $5,500
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52
Use the table, with data for Bella and Martin, to answer the question.
If Bella and Martin successfully cooperate, then Bella's profit will be _____, and Martin's profit will be _____.
A)$6,000; $1,000
B)$4,000; $3,500
C)$5,000; $5,000
D)$1,000; $5,500
If Bella and Martin successfully cooperate, then Bella's profit will be _____, and Martin's profit will be _____.
A)$6,000; $1,000
B)$4,000; $3,500
C)$5,000; $5,000
D)$1,000; $5,500
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53
Use the table, with data for Bella and Martin, to answer the question.
If Bella and Martin cooperate, Bella would earn _____ more and Martin _____ more than they would without cooperation.
A)$3,000; $2,000
B)$5,000; $4,500
C)$5,000; $5,000
D)$1,000; $1,500
If Bella and Martin cooperate, Bella would earn _____ more and Martin _____ more than they would without cooperation.
A)$3,000; $2,000
B)$5,000; $4,500
C)$5,000; $5,000
D)$1,000; $1,500
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54
Use the table, with data for Bishan and Amara, to answer the question.
If Bishan and Amara cooperate, Bishan would earn _____ more and Amara would earn _____ more than they would without cooperation.
A)$100; $20
B)$1,700; $2,000
C)$300; $400
D)$1,000; $1,200
If Bishan and Amara cooperate, Bishan would earn _____ more and Amara would earn _____ more than they would without cooperation.
A)$100; $20
B)$1,700; $2,000
C)$300; $400
D)$1,000; $1,200
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55
When resources are shared or owned in common, the Nash equilibrium leads to:
A)underuse of resources.
B)overuse of resources.
C)higher profits than with unshared resources.
D)lower profits than with unshared resources.
A)underuse of resources.
B)overuse of resources.
C)higher profits than with unshared resources.
D)lower profits than with unshared resources.
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56
The Nash equilibrium leads to the overuse of resources when:
A)competition is intense.
B)profit is not the main goal.
C)resources are privately owned.
D)resources are shared.
A)competition is intense.
B)profit is not the main goal.
C)resources are privately owned.
D)resources are shared.
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57
The tragedy of commons is due to:
A)excessive cooperation to extract maximum group profits.
B)a failure to cooperate so that all players take only their fair share.
C)a failure to reach a Nash equilibrium.
D)demand exceeding supply when payoffs are considered.
A)excessive cooperation to extract maximum group profits.
B)a failure to cooperate so that all players take only their fair share.
C)a failure to reach a Nash equilibrium.
D)demand exceeding supply when payoffs are considered.
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58
Peter and Olga live near a lake with open fishing, and both have fishing boats there. They are the only two providers of fish to their local fish market. What is likely to happen if the local fish market maintains a Nash equilibrium?
A)Peter and Olga will obtain the maximum possible profits.
B)Fish prices will fall due to competitive pressures.
C)The supply of fish will flourish due to underfishing.
D)The supply of fish will dwindle due to overfishing.
A)Peter and Olga will obtain the maximum possible profits.
B)Fish prices will fall due to competitive pressures.
C)The supply of fish will flourish due to underfishing.
D)The supply of fish will dwindle due to overfishing.
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59
When a market uses a resource owned in common, then in the Nash equilibrium in that market,:
A)producers will continue to have an incentive to enter, causing the equilibrium to constantly change.
B)the resource will be overused.
C)producers will have higher costs than if all resources were private.
D)less will be produced than is in the public's best interest.
A)producers will continue to have an incentive to enter, causing the equilibrium to constantly change.
B)the resource will be overused.
C)producers will have higher costs than if all resources were private.
D)less will be produced than is in the public's best interest.
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60
The tragedy of commons leads to a Nash equilibrium with shared resources that are:
A)turned into privately owned resources.
B)excluded from production.
C)underused.
D)overused.
A)turned into privately owned resources.
B)excluded from production.
C)underused.
D)overused.
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61
Use the table, with data for Peter and Olga, to answer the question.
Peter and Olga live near a lake with open fishing, and both have fishing boats there. They are the only two sellers in their local fish market. What is likely to be the result in a Nash equilibrium?
A)Both Olga and Peter have smaller and smaller catches over time.
B)Peter catches and sells more fish than Olga.
C)Olga catches and sells more fish than Peter.
D)Both Olga and Peter continue to have large catches on each fishing trip.
Peter and Olga live near a lake with open fishing, and both have fishing boats there. They are the only two sellers in their local fish market. What is likely to be the result in a Nash equilibrium?
A)Both Olga and Peter have smaller and smaller catches over time.
B)Peter catches and sells more fish than Olga.
C)Olga catches and sells more fish than Peter.
D)Both Olga and Peter continue to have large catches on each fishing trip.
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62
Cooperation requires:
A)common goals and methods.
B)coordination regarding who does what.
C)no more than one player.
D)interaction but not coordination.
A)common goals and methods.
B)coordination regarding who does what.
C)no more than one player.
D)interaction but not coordination.
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63
Multiple equilibria exist when:
A)there are many different product markets, each with its own equilibrium.
B)a market splits in two, so that there are two markets, each with its own equilibrium.
C)there are multiple products but one market with one equilibrium for these products.
D)there is more than one equilibrium.
A)there are many different product markets, each with its own equilibrium.
B)a market splits in two, so that there are two markets, each with its own equilibrium.
C)there are multiple products but one market with one equilibrium for these products.
D)there is more than one equilibrium.
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64
A situation with more than one equilibrium is called:
A)partial equilibrium.
B)multiple equilibria.
C)excess balance points.
D)varied settlements.
A)partial equilibrium.
B)multiple equilibria.
C)excess balance points.
D)varied settlements.
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65
A coordination game exists when:
A)the product or issue of the game concerns communication, such as phones or media.
B)coordination is costless and easy, regardless of whether it is harmful.
C)all players have a common interest in coordinating their choices.
D)collusion created the market or situation from the start.
A)the product or issue of the game concerns communication, such as phones or media.
B)coordination is costless and easy, regardless of whether it is harmful.
C)all players have a common interest in coordinating their choices.
D)collusion created the market or situation from the start.
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66
When all players have a common interest in coordinating their choices, there is:
A)a coordination game.
B)a systemization game.
C)an interaction game.
D)an intermeshing organization.
A)a coordination game.
B)a systemization game.
C)an interaction game.
D)an intermeshing organization.
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67
What problem arises in coordination games with multiple equilibria?
A)Players have no incentive to coordinate.
B)The multiple equilibria mean that coordination yields no possible gain.
C)The equilibria make all players worse off.
D)It is difficult to achieve the commonly desired outcome.
A)Players have no incentive to coordinate.
B)The multiple equilibria mean that coordination yields no possible gain.
C)The equilibria make all players worse off.
D)It is difficult to achieve the commonly desired outcome.
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68
When players will be better off if they coordinate their choices, there is a:
A)back-hand game.
B)collusion game.
C)coordination game.
D)multiple incentive.
A)back-hand game.
B)collusion game.
C)coordination game.
D)multiple incentive.
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69
How can multiple equilibria be identified, using the check mark method on a payoff table?
A)More than one cell has two checks, and those cells represent equilibria.
B)There is a check in more than one cell, each check indicating an equilibrium.
C)Multiple cells have no checks, and those cells are the equilibria.
D)A check is put in a cell if both players have agreed to take that action.
A)More than one cell has two checks, and those cells represent equilibria.
B)There is a check in more than one cell, each check indicating an equilibrium.
C)Multiple cells have no checks, and those cells are the equilibria.
D)A check is put in a cell if both players have agreed to take that action.
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70
Which of the following is NOT an example of a coordination game?
A)interpersonal relationships
B)coordination with customers
C)deciding whether to grow tomatoes or flowers
D)deciding whether to use the same technology as others you are connected to
A)interpersonal relationships
B)coordination with customers
C)deciding whether to grow tomatoes or flowers
D)deciding whether to use the same technology as others you are connected to
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71
Use the table, with data for Rocky and Tina, to answer the question.
Both Tina and Rocky are ready to buy new phones. The accessories are things like cables. What is the term for the type of game Tina and Rocky are playing?
A)an anti-coordination game
B)a one-shot game
C)a single equilibrium game
D)a coordination game
Both Tina and Rocky are ready to buy new phones. The accessories are things like cables. What is the term for the type of game Tina and Rocky are playing?
A)an anti-coordination game
B)a one-shot game
C)a single equilibrium game
D)a coordination game
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72
Use the table, with data for a company and available workers, to answer the question.
A company wants certified workers for its production and is trying to decide whether to hire only workers who already have certifications or to hire untrained workers and provide on-the-job certification training. Those entering the workforce are trying to decide whether to seek certification training in order to get a stable job. What type of game is represented in this payoff table?
A)a coordination game with multiple equilibria
B)a prisoner's game with Coase equilibria
C)a coordination game with a single equilibrium
D)an anti-coordination game with a single equilibrium
A company wants certified workers for its production and is trying to decide whether to hire only workers who already have certifications or to hire untrained workers and provide on-the-job certification training. Those entering the workforce are trying to decide whether to seek certification training in order to get a stable job. What type of game is represented in this payoff table?
A)a coordination game with multiple equilibria
B)a prisoner's game with Coase equilibria
C)a coordination game with a single equilibrium
D)an anti-coordination game with a single equilibrium
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73
Use the table with data for an election to answer the question.
Tori is running for a government office in an election. Merced and many others want Tori to win and are deciding whether to campaign for Tori. The amount of campaigning will have a significant impact on the outcome of the election. What type of game is being played in Table 11?
A)a coordination game with a single equilibrium
B)a coordination game with multiple equilibria
C)a prisoner's game with a dilemma equilibrium
D)an anti-coordination game with multiple equilibria
Tori is running for a government office in an election. Merced and many others want Tori to win and are deciding whether to campaign for Tori. The amount of campaigning will have a significant impact on the outcome of the election. What type of game is being played in Table 11?
A)a coordination game with a single equilibrium
B)a coordination game with multiple equilibria
C)a prisoner's game with a dilemma equilibrium
D)an anti-coordination game with multiple equilibria
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74
Which of the following is NOT an example of a coordination game with multiple equilibria?
A)Two people decide whether to remain friends or pursue a romantic relationship with each other.
B)Two sellers are in a market where their best option is the same regardless of what the other firm does.
C)Potential protesters decide whether to participate in protests to try to overthrow a government.
D)A company decides in which hours to operate for the convenience of its customers and suppliers.
A)Two people decide whether to remain friends or pursue a romantic relationship with each other.
B)Two sellers are in a market where their best option is the same regardless of what the other firm does.
C)Potential protesters decide whether to participate in protests to try to overthrow a government.
D)A company decides in which hours to operate for the convenience of its customers and suppliers.
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75
When a player's best response is to take a different (but complementary) action to the other player, then both participants are playing _____ game.
A)a coordination
B)an anti-coordination
C)a Coase equilibrium
D)a strategic dilemma
A)a coordination
B)an anti-coordination
C)a Coase equilibrium
D)a strategic dilemma
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76
An anti-coordination game is a game where:
A)both players have the same best response, regardless of what one player does.
B)both players will gain from coordination but will resist initiating it.
C)a player's best response goes against the welfare of the other player without complementarity.
D)a player's best response is to take a different (but complementary) action to the other player.
A)both players have the same best response, regardless of what one player does.
B)both players will gain from coordination but will resist initiating it.
C)a player's best response goes against the welfare of the other player without complementarity.
D)a player's best response is to take a different (but complementary) action to the other player.
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77
Which of the following is NOT an example of an anti-coordination game?
A)Drivers try to choose the route with the least traffic.
B)Two opposing negotiators decide whether to argue aggressively or passively.
C)A market has multiple suppliers and common, rival resources.
D)Multiple firms decide whether to enter a market that can support only one more firm.
A)Drivers try to choose the route with the least traffic.
B)Two opposing negotiators decide whether to argue aggressively or passively.
C)A market has multiple suppliers and common, rival resources.
D)Multiple firms decide whether to enter a market that can support only one more firm.
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78
There are two popular hiking trails between the bottom parking lot and the top of a mountain. Both trails are similar in length and difficulty. If Markus and Jarrah want to hike on the less crowded trail, they are facing what type of game?
A)a coordination game
B)an anti-coordination game
C)a Coase equilibrium game
D)a single issue game
A)a coordination game
B)an anti-coordination game
C)a Coase equilibrium game
D)a single issue game
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79
Which is an example of an anti-coordination game?
A)Sela is trying to decide where to locate her new factory in relation to her suppliers and customers.
B)Mara and her international suppliers and customers are deciding what language to use in contracts.
C)Atith must decide whether to pursue a romantic relationship with his friend Charaya.
D)Chan wants to hike on the less crowded of the two popular hiking trails that go around the mountain.
A)Sela is trying to decide where to locate her new factory in relation to her suppliers and customers.
B)Mara and her international suppliers and customers are deciding what language to use in contracts.
C)Atith must decide whether to pursue a romantic relationship with his friend Charaya.
D)Chan wants to hike on the less crowded of the two popular hiking trails that go around the mountain.
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80
Which of the following is an example of an anti-coordination game?
A)Jamal owns one of several fishing boats that catch fish on a public lake with no restrictions on fishing.
B)A market has enough growth in demand to support only one more firm, and Asad wants that firm to be his.
C)Sharna wants the dictator in her country to be overthrown and must decide whether to protest against him.
D)Matt is deciding whether to use Flash or html5 for his website.
A)Jamal owns one of several fishing boats that catch fish on a public lake with no restrictions on fishing.
B)A market has enough growth in demand to support only one more firm, and Asad wants that firm to be his.
C)Sharna wants the dictator in her country to be overthrown and must decide whether to protest against him.
D)Matt is deciding whether to use Flash or html5 for his website.
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