Question 1

If,in the game in Scenario 13.14,R moves first,C will respond with

Accepted Answer

A) Q = 50. 
B) Q = 100. 
C) Q = 150. 
D) a mixed strategy over the three choices that includes some positive likelihood for each Q. 
E) a mixed strategy over the choices Q = 50 and Q = 100.

Question 2

Consider the Matching Pennies game:  Suppose Player A always uses a pure strategy that selects heads,and Player B always uses a pure strategy that selects tails.Is this outcome a Nash equilibrium?

Accepted Answer

A) Yes,both players have no incentive to change their actions. 
B) No,Player A would want to switch to tails. 
C) No,Player B would want to switch to heads. 
D) No,Player B would want to switch to tails.

Question 3

Scenario 13.7:
Consider the game below about funding and construction of a dam to protect a 1,000-person town.Contributions to the Dam Fund,once made,cannot be recovered,and all citizens must contribute $1,000 to the dam in order for it to be built.The dam,if built,is worth $70,000 to each citizen. 
-Refer to the game in Scenario 13.7.If each player chose a maximin strategy,the outcome would be

Accepted Answer

A) $69,000,$69,000. 
B) $0,-$1000. 
C) -$1000,$0. 
D) $0,$0. 
E) a mixed strategy equilibrium.

Question 4

In the spring of 1994,Northwest Airlines took the independent action of reducing fares on its flights.Other competing airlines quickly matched the fare cuts.These actions might be interpreted as:

Accepted Answer

A) a noncooperative game. 
B) a cooperative game. 
C) a constant sum game. 
D) a competitive game.

Question 5

Your economics professor has decided that your class will not be graded on a curve but on an absolute scale.Therefore,it is possible for every student in the class to get an "A." Your grade will not depend in any way on your classmates' performance.Based on this information,you decide that you should study economics three hours each day,regardless of what your classmates do.In the language of game theory,your decision to study three hours each day is:

Accepted Answer

A) a dominant strategy. 
B) a minimax strategy. 
C) a maximin strategy. 
D) a Prisoner's dilemma.

Question 6

Consider the following game in which two firms decide how much of a homogeneous good to produce.The annual profit payoffs for each firm are stated in the cell of the game matrix,and Firm A's payoffs appear first in the payoff pairs:  What are the dominant strategies in this game?

Accepted Answer

A) Both firms producer low levels of output 
B) Both firms produce high levels of output 
C) Firm A's dominant strategy is to produce low levels of output,but Firm B does not have a dominant strategy. 
D) Firm B's dominant strategy is to produce low levels of output,but Firm A does not have a dominant strategy. 
E) Neither firm has a dominant strategy

Question 7

Scenario 13.11
Consider the game below: 
-What is true about dominant strategies in the game in Scenario 13.11?

Accepted Answer

A) R1 and C1 are dominant strategies. 
B) R1 and C2 are dominant strategies. 
C) R2 and C1 are dominant strategies. 
D) R2 and C2 are dominant strategies. 
E) There are no dominant strategies.

Question 8

In a Nash equilibrium,

Accepted Answer

A) each player has a dominant strategy. 
B) no players have a dominant strategy. 
C) at least one player has a dominant strategy. 
D) players may or may not have dominant strategies. 
E) the player with the dominant strategy will win.

Question 9

Use the following statements to answer the question: I.Consider the problem of negotiating the price of a rug that costs $100 to make.If there are two buyers (one with a maximum willingness-to-pay of $200 and one with a maximum willingness-to-pay of $250),then the situation is no longer a constant sum game.
II.The likely outcome from the game described in statement I is that the second buyer will bid a price slightly above $200 to win the rug.

Accepted Answer

A) I and II are true. 
B) I is true and II is false. 
C) II is true and I is false. 
D) I and II are false.

Question 10

Relative to a simultaneous-move situation,the gain to firm R from being able to move first in the game in Scenario 13.14,would be

Accepted Answer

A) 40. 
B) 37. 
C) 32. 
D) 5) 
E) 3)

Question 11

Scenario 13.8
Consider the following game: 
-The game in Scenario 13.8 is

Accepted Answer

A) variable-sum. 
B) constant-sum. 
C) cooperative. 
D) a Prisoner's Dilemma. 
E) a Conjoint Crux.

Question 12

Playing the game in Scenario 13.13 sequentially would

Accepted Answer

A) not change the equilibrium. 
B) change the equilibrium to (R1,C1). 
C) change the equilibrium to (R2,C1)if R moved first. 
D) change the equilibrium to (R2,C1)if C moved first. 
E) change the equilibrium to (R2,C2).

Question 13

Scenario 13.9
Consider the following game:
Two firms are situated next to a lake,and it costs each firm $1,500 per period to use filters that avoid polluting the lake.However,each firm must use the lake's water in production,so it is also costly to have a polluted lake.The cost to each firm of dealing with water from a polluted lake is $1,000 times the number of polluting firms. 
-Refer to Scenario 13.9.What kind of game is being played by Lago and Nessie?

Accepted Answer

A) Battle of the Sexes. 
B) Prisoner's Dilemma. 
C) Beach Location. 
D) Stackelberg Output Choice. 
E) Cournot Output Choice.

Question 14

Scenario 13.10
Consider the game below: 
-What is true about dominant strategies in the game in Scenario 13.10?

Accepted Answer

A) "Use more caffeine" and "have a sweepstakes" are dominant strategies. 
B) "Use more caffeine" and "create a diet soda" are dominant strategies. 
C) "Make animal-shaped bottles" and "have a sweepstakes" are dominant strategies. 
D) "Make animal-shaped bottles" and "create a diet soda" are dominant strategies. 
E) There are no dominant strategies.

Question 15

In the game in Scenario 13.11,equilibrium is

Accepted Answer

A) R1,C1. 
B) R1,C2. 
C) R2,C1. 
D) R2,C2. 
E) a mixed strategy based on all four pure strategies.

Question 16

Use the following statements to answer this question: I.A player must have at least one dominant strategy in a game.
II.If neither player in a game has a dominant strategy in a game,then there is no equilibrium outcome for the game.

Accepted Answer

A) I and II are true. 
B) I is true and II is false. 
C) II is true and I is false. 
D) I and II are false.

Question 17

Scenario 13.6
Consider the following game: Payoffs are in millions of dollars. 
-In the game in Scenario 13.6,what is the Nash equilibrium?

Accepted Answer

A) The strategy pair associated with -$100,-$1. 
B) The strategy pair associated with $2,-$0.5. 
C) The strategy pair associated with $1,-$1. 
D) The strategy pair associated with -$0.5,-$0.5. 
E) There is no Nash equilibrium in pure strategies.

Question 18

Wal-Mart was one of the most successful firms of the 1970s and 1980s.Much of Wal-Mart's success can be credited to its expansion strategy: they rushed to open the first discount store in small towns that could only support one discount store.In the language of game theory:

Accepted Answer

A) Wal-Mart was a dominant firm. 
B) Wal-Mart made empty threats. 
C) Wal-Mart employed a maximin strategy. 
D) Wal-Mart employed a preemptive strategy.

Question 19

Scenario 13.9
Consider the following game:
Two firms are situated next to a lake,and it costs each firm $1,500 per period to use filters that avoid polluting the lake.However,each firm must use the lake's water in production,so it is also costly to have a polluted lake.The cost to each firm of dealing with water from a polluted lake is $1,000 times the number of polluting firms. 
-Refer to Scenario 13.9.The equilibrium of this game,if played only once,is that

Accepted Answer

A) both firms pollute. 
B) only Lago pollutes. 
C) only Nessie pollutes. 
D) neither firm pollutes. 
E) the firms choose a mixed strategy.

Question 20

Two firms in a local market compete in the manufacture of cyberwidgets.Each firm must decide if they will engage in product research to innovate their version of the cyberwidget.The pay-offs of each firm's strategy is a function of the strategy of their competitor as well.The pay-off matrix is presented below.  Does either player have a dominant strategy? Does the game have any Nash equilibria? What is the maximin strategy of each player in the game?

Accepted Answer

The answer of Two firms in a local market compete...

Exam 13: Game Theory and Competitive Strategy

If,in the game in Scenario 13.14,R moves first,C will respond with

Consider the Matching Pennies game: Suppose Player A always uses a pure strategy that selects heads,and Player B always uses a pure strategy that selects tails.Is this outcome a Nash equilibrium?

In the spring of 1994,Northwest Airlines took the independent action of reducing fares on its flights.Other competing airlines quickly matched the fare cuts.These actions might be interpreted as:

Consider the following game in which two firms decide how much of a homogeneous good to produce.The annual profit payoffs for each firm are stated in the cell of the game matrix,and Firm A's payoffs appear first in the payoff pairs: What are the dominant strategies in this game?

Scenario 13.11 Consider the game below: -What is true about dominant strategies in the game in Scenario 13.11?

In a Nash equilibrium,

Relative to a simultaneous-move situation,the gain to firm R from being able to move first in the game in Scenario 13.14,would be

Scenario 13.8 Consider the following game: -The game in Scenario 13.8 is

Playing the game in Scenario 13.13 sequentially would

Scenario 13.10 Consider the game below: -What is true about dominant strategies in the game in Scenario 13.10?

In the game in Scenario 13.11,equilibrium is

Use the following statements to answer this question: I.A player must have at least one dominant strategy in a game. II.If neither player in a game has a dominant strategy in a game,then there is no equilibrium outcome for the game.

Scenario 13.6 Consider the following game: Payoffs are in millions of dollars. -In the game in Scenario 13.6,what is the Nash equilibrium?

Wal-Mart was one of the most successful firms of the 1970s and 1980s.Much of Wal-Mart's success can be credited to its expansion strategy: they rushed to open the first discount store in small towns that could only support one discount store.In the language of game theory: