Filters
Question type
Study Flashcards

Which of the following circumstances does NOT involve game theory?


A) A local gas station owner wondering how his competition across the street will react to his decision to lower prices.
B) Buying a can of beef stew at the grocery store.
C) Negotiating a salary when two firms have made offers.
D) Deciding whether to have an extramarital affair.
E) Playing poker.

F) A) and D)
G) C) and E)

Correct Answer

verifed

verified

The Organization of Petroleum Exporting Countries (OPEC) behaves in many ways like an international cartel.If the cartel were to hire a consulting firm to monitor the production rates of member countries,the economic reason for this monitoring would be to


A) make sure that each member country is producing at an output level at which price equals marginal cost.
B) make sure all the member countries produce at least their quotas,so that there will be no oil shortage.
C) detect those member countries that are reducing prices by producing more than their assigned quotas.
D) make sure that the marginal revenue for the last barrel of oil sold by each member country is less than its price.
E) make sure competition is increased.

F) None of the above
G) A) and C)

Correct Answer

verifed

verified

Mexico and OPEC both produce crude oil.Realizing that it would be in their best interest to form an agreement on production goals,a meeting is arranged and an informal,verbal agreement is reached.If both Mexico and OPEC stick to the agreement,OPEC will earn profit of $200 million and Mexico will earn profit of $100 million.If both Mexico and OPEC cheat,then OPEC will earn $175 million and Mexico will earn $80 million.If only OPEC cheats,then OPEC earns $185 million and Mexico $60 million.If only Mexico cheats,then Mexico earns $110 million and OPEC $150 million. Mexico and OPEC both produce crude oil.Realizing that it would be in their best interest to form an agreement on production goals,a meeting is arranged and an informal,verbal agreement is reached.If both Mexico and OPEC stick to the agreement,OPEC will earn profit of $200 million and Mexico will earn profit of $100 million.If both Mexico and OPEC cheat,then OPEC will earn $175 million and Mexico will earn $80 million.If only OPEC cheats,then OPEC earns $185 million and Mexico $60 million.If only Mexico cheats,then Mexico earns $110 million and OPEC $150 million. -Refer to the information given above.The outcome of this game is A) unknown. B) a Nash equilibrium with both Mexico and OPEC cheating. C) a Nash equilibrium with Mexico cheating and OPEC not cheating. D) a Nash equilibrium with Mexico not cheating and OPEC cheating. E) a Nash equilibrium with both Mexico and OPEC not cheating. -Refer to the information given above.The outcome of this game is


A) unknown.
B) a Nash equilibrium with both Mexico and OPEC cheating.
C) a Nash equilibrium with Mexico cheating and OPEC not cheating.
D) a Nash equilibrium with Mexico not cheating and OPEC cheating.
E) a Nash equilibrium with both Mexico and OPEC not cheating.

F) B) and C)
G) B) and E)

Correct Answer

verifed

verified

In the above decision tree,Matthew picks first and Dean picks second.Matthew and Dean both know the payoffs to each choice for both themselves and each other.In this game,Matthew is the remote owner of an office that is managed by Dean,and Dean promises to always choose the upper branch at Y or Z in order to maximize Matthew's payoff. -Refer to the above decision tree.Suppose that the society in which Matthew and Dean live is one in which some citizens behave dishonestly.One can predict that Matthew will pick ________ because ________. A) Y;it provides higher payoffs than Z B) Y;he knows that Dean will pick the upper branch C) Y;he knows that Dean will pick the lower branch D) Z;he knows that Dean will pick the upper branch E) Z;he knows that Dean will pick the lower branch In the above decision tree,Matthew picks first and Dean picks second.Matthew and Dean both know the payoffs to each choice for both themselves and each other.In this game,Matthew is the remote owner of an office that is managed by Dean,and Dean promises to always choose the upper branch at Y or Z in order to maximize Matthew's payoff. -Refer to the above decision tree.Suppose that the society in which Matthew and Dean live is one in which some citizens behave dishonestly.One can predict that Matthew will pick ________ because ________.


A) Y;it provides higher payoffs than Z
B) Y;he knows that Dean will pick the upper branch
C) Y;he knows that Dean will pick the lower branch
D) Z;he knows that Dean will pick the upper branch
E) Z;he knows that Dean will pick the lower branch

F) All of the above
G) B) and E)

Correct Answer

verifed

verified

Intel is ready to introduce its new microprocessor.In chip manufacturing,as more chips are produced,production yields rise.Thus,Intel can choose between a below-cost pricing strategy (upper branch) to reach the higher-yield zone more quickly,or an above-cost pricing strategy (lower branch) and move to the higher-yield zone more slowly.AMD will introduce its new microprocessor two months after Intel,and faces the same below-cost (upper branch) and above-cost (lower branch) strategies.Writing out the outcomes on the decision tree might prove helpful as you answer the following questions. -Refer to the decision tree above.Point Y represents AMD choosing A) between above-or below-cost pricing. B) between above-or below-cost pricing,given Intel picked below-cost pricing. C) below-cost pricing. D) below-cost pricing,given Intel picked below-cost pricing. E) between above-or below-cost pricing,given Intel picked above-cost pricing. Intel is ready to introduce its new microprocessor.In chip manufacturing,as more chips are produced,production yields rise.Thus,Intel can choose between a below-cost pricing strategy (upper branch) to reach the higher-yield zone more quickly,or an above-cost pricing strategy (lower branch) and move to the higher-yield zone more slowly.AMD will introduce its new microprocessor two months after Intel,and faces the same below-cost (upper branch) and above-cost (lower branch) strategies.Writing out the outcomes on the decision tree might prove helpful as you answer the following questions. -Refer to the decision tree above.Point Y represents AMD choosing


A) between above-or below-cost pricing.
B) between above-or below-cost pricing,given Intel picked below-cost pricing.
C) below-cost pricing.
D) below-cost pricing,given Intel picked below-cost pricing.
E) between above-or below-cost pricing,given Intel picked above-cost pricing.

F) C) and D)
G) B) and D)

Correct Answer

verifed

verified

Game theory is important in understanding


A) how perfectly competitive firms behave.
B) production decisions by firms.
C) consumer demand.
D) interdependence and choice.
E) the behaviour of a pure monopolist.

F) A) and E)
G) B) and C)

Correct Answer

verifed

verified

In the ultimatum game in which player A divides a sum of money and then player B accepts or rejects the division,when the proposed distribution greatly favours player A,player B


A) accepts it all of the time.
B) accepts it most of the time.
C) accepts it half of the time.
D) rarely rejects it.
E) almost always rejects it.

F) B) and D)
G) A) and C)

Correct Answer

verifed

verified

E

Intel is ready to introduce its new microprocessor.In chip manufacturing,as more chips are produced,production yields rise.Thus,Intel can choose between a below-cost pricing strategy (upper branch) to reach the higher-yield zone more quickly,or an above-cost pricing strategy (lower branch) and move to the higher-yield zone more slowly.AMD will introduce its new microprocessor two months after Intel,and faces the same below-cost (upper branch) and above-cost (lower branch) strategies.Writing out the outcomes on the decision tree might prove helpful as you answer the following questions. -Refer to the decision tree above.AMD will A) never choose below-cost pricing. B) always choose above-cost pricing. C) always choose below-cost pricing. D) choose below-cost pricing only if Intel picks above-cost pricing. E) choose above-cost pricing if Intel picks above-cost pricing. Intel is ready to introduce its new microprocessor.In chip manufacturing,as more chips are produced,production yields rise.Thus,Intel can choose between a below-cost pricing strategy (upper branch) to reach the higher-yield zone more quickly,or an above-cost pricing strategy (lower branch) and move to the higher-yield zone more slowly.AMD will introduce its new microprocessor two months after Intel,and faces the same below-cost (upper branch) and above-cost (lower branch) strategies.Writing out the outcomes on the decision tree might prove helpful as you answer the following questions. -Refer to the decision tree above.AMD will


A) never choose below-cost pricing.
B) always choose above-cost pricing.
C) always choose below-cost pricing.
D) choose below-cost pricing only if Intel picks above-cost pricing.
E) choose above-cost pricing if Intel picks above-cost pricing.

F) B) and E)
G) A) and D)

Correct Answer

verifed

verified

Suppose Jim and Celia,a married couple,are trying to decide what to do on a Friday.Jim would prefer to see Rambo X while Celia would prefer to see Das Auto,an arty foreign film.Both films are showing at the local Megaplex.The joy they receive from the films and seeing them together,or separately,is shown in the payoff matrix.Both Jim and Celia know the information contained in the payoff matrix.They purchase their tickets simultaneously,ignorant of the other's choice. Suppose Jim and Celia,a married couple,are trying to decide what to do on a Friday.Jim would prefer to see Rambo X while Celia would prefer to see Das Auto,an arty foreign film.Both films are showing at the local Megaplex.The joy they receive from the films and seeing them together,or separately,is shown in the payoff matrix.Both Jim and Celia know the information contained in the payoff matrix.They purchase their tickets simultaneously,ignorant of the other's choice. -Which of the following is NOT a requirement of a game? A) Players. B) Payoffs. C) Dominant strategies. D) Strategies. E) Knowledge of the payoffs. -Which of the following is NOT a requirement of a game?


A) Players.
B) Payoffs.
C) Dominant strategies.
D) Strategies.
E) Knowledge of the payoffs.

F) C) and E)
G) A) and D)

Correct Answer

verifed

verified

Suppose Jim and Celia,a married couple,are trying to decide what to do on a Friday.Jim would prefer to see Rambo X while Celia would prefer to see Das Auto,an arty foreign film.Both films are showing at the local Megaplex.The joy they receive from the films and seeing them together,or separately,is shown in the payoff matrix.Both Jim and Celia know the information contained in the payoff matrix.They purchase their tickets simultaneously,ignorant of the other's choice. Suppose Jim and Celia,a married couple,are trying to decide what to do on a Friday.Jim would prefer to see Rambo X while Celia would prefer to see Das Auto,an arty foreign film.Both films are showing at the local Megaplex.The joy they receive from the films and seeing them together,or separately,is shown in the payoff matrix.Both Jim and Celia know the information contained in the payoff matrix.They purchase their tickets simultaneously,ignorant of the other's choice. -Game theory is not useful in understanding perfect competition because A) by assumption,the firms are so small as to be unable to influence price and thus are not interdependent. B) perfectly competitive firms are honest. C) the players cannot be identified. D) the payoffs to their choices are unknown. E) their strategies cannot be understood. -Game theory is not useful in understanding perfect competition because


A) by assumption,the firms are so small as to be unable to influence price and thus are not interdependent.
B) perfectly competitive firms are honest.
C) the players cannot be identified.
D) the payoffs to their choices are unknown.
E) their strategies cannot be understood.

F) All of the above
G) A) and B)

Correct Answer

verifed

verified

The table below shows the payoff matrix in the form of short-run profit for two firms,A and B,for two different strategies,investing in new capital or not investing. The table below shows the payoff matrix in the form of short-run profit for two firms,A and B,for two different strategies,investing in new capital or not investing. -Refer to the payoff matrix above.For firm B, A) investing is its dominated strategy. B) not investing is its dominated strategy. C) it has no dominated strategy. D) not investing is its dominant strategy. E) it has no dominant strategy. -Refer to the payoff matrix above.For firm B,


A) investing is its dominated strategy.
B) not investing is its dominated strategy.
C) it has no dominated strategy.
D) not investing is its dominant strategy.
E) it has no dominant strategy.

F) A) and E)
G) C) and E)

Correct Answer

verifed

verified

Interdependence is an important consideration when modelling the behaviour of


A) consumers.
B) strangers.
C) perfectly competitive firms.
D) monopolies.
E) oligopolies.

F) A) and B)
G) B) and E)

Correct Answer

verifed

verified

Mexico and OPEC both produce crude oil.Realizing that it would be in their best interest to form an agreement on production goals,a meeting is arranged and an informal,verbal agreement is reached.If both Mexico and OPEC stick to the agreement,OPEC will earn profit of $200 million and Mexico will earn profit of $100 million.If both Mexico and OPEC cheat,then OPEC will earn $175 million and Mexico will earn $80 million.If only OPEC cheats,then OPEC earns $185 million and Mexico $60 million.If only Mexico cheats,then Mexico earns $110 million and OPEC $150 million. Mexico and OPEC both produce crude oil.Realizing that it would be in their best interest to form an agreement on production goals,a meeting is arranged and an informal,verbal agreement is reached.If both Mexico and OPEC stick to the agreement,OPEC will earn profit of $200 million and Mexico will earn profit of $100 million.If both Mexico and OPEC cheat,then OPEC will earn $175 million and Mexico will earn $80 million.If only OPEC cheats,then OPEC earns $185 million and Mexico $60 million.If only Mexico cheats,then Mexico earns $110 million and OPEC $150 million. -Refer to the information given above.OPEC finds that it has A) a dominant strategy of cheating. B) a dominated strategy of cheating. C) a dominant strategy of not cheating. D) a dominated strategy of not cheating. E) no dominant strategy. -Refer to the information given above.OPEC finds that it has


A) a dominant strategy of cheating.
B) a dominated strategy of cheating.
C) a dominant strategy of not cheating.
D) a dominated strategy of not cheating.
E) no dominant strategy.

F) A) and E)
G) B) and D)

Correct Answer

verifed

verified

A credible promise is an action that


A) is in the promiser's interest to keep.
B) is legally enforceable.
C) is not in the promiser's interest to keep.
D) is not in the promisee's interest to keep.
E) seems believable.

F) B) and D)
G) C) and E)

Correct Answer

verifed

verified

A

The key feature that requires the use of game theory to comprehend behaviour is


A) profit maximization.
B) limited information.
C) time.
D) utility maximization.
E) interdependence.

F) A) and C)
G) A) and E)

Correct Answer

verifed

verified

Suppose Jim and Celia,a married couple,are trying to decide what to do on a Friday.Jim would prefer to see Rambo X while Celia would prefer to see Das Auto,an arty foreign film.Both films are showing at the local Megaplex.The joy they receive from the films and seeing them together,or separately,is shown in the payoff matrix.Both Jim and Celia know the information contained in the payoff matrix.They purchase their tickets simultaneously,ignorant of the other's choice. Suppose Jim and Celia,a married couple,are trying to decide what to do on a Friday.Jim would prefer to see Rambo X while Celia would prefer to see Das Auto,an arty foreign film.Both films are showing at the local Megaplex.The joy they receive from the films and seeing them together,or separately,is shown in the payoff matrix.Both Jim and Celia know the information contained in the payoff matrix.They purchase their tickets simultaneously,ignorant of the other's choice. -Refer to the payoff matrix above.Suppose a timing element is added to the game: assume Celia buys her ticket first.While Jim did not see which ticket Celia bought,he still knows the values in the payoff matrix.Acting on the basis of self interest,Celia will A) buy a ticket to both movies. B) buy a ticket to Das Auto. C) flip a coin to determine which ticket to buy. D) buy a ticket to Rambo X. E) go home. -Refer to the payoff matrix above.Suppose a timing element is added to the game: assume Celia buys her ticket first.While Jim did not see which ticket Celia bought,he still knows the values in the payoff matrix.Acting on the basis of self interest,Celia will


A) buy a ticket to both movies.
B) buy a ticket to Das Auto.
C) flip a coin to determine which ticket to buy.
D) buy a ticket to Rambo X.
E) go home.

F) D) and E)
G) A) and C)

Correct Answer

verifed

verified

B

Under oligopoly,if one firm in an industry significantly increases advertising expenditures in order to capture a greater market share,it is most likely that other firms in that industry will


A) pursue a strategy to reduce advertising expenditures to maintain profit.
B) decide to increase advertising expenditures even if it means a reduction in profit.
C) make no changes in advertising expenditures,because advertising is effective in the short run,but not the long run.
D) increase the price of the product to improve profit and then increase advertising expenditures.
E) try to buy out the firm that significantly increases advertising expenditures in order to capture a greater market share.

F) A) and E)
G) A) and D)

Correct Answer

verifed

verified

Joe is the owner of the PetroCanada Mini Mart,Sam is the owner of the BP Mini Mart,and together they are the only gas stations in town.At the current price of $1 per litre,each receives total revenue of $1000.Joe is considering cutting his price to 90 cents per litre,which would increase his total revenue to $1350.If Sam's price remains at $1 per litre after Joe cuts his price,Sam will collect $500 in revenue.If Sam cuts his price to 90 cents per litre,his total revenue would also rise to $1350 if Joe continues to charge $1 per litre.Joe will collect $500 in revenue if he keeps his price at $1 per litre while Sam lowers his to 90 cents per litre.Joe and Sam will receive $900 each in total revenue if they both lower their price to 90 cents per litre.You may find it easier to answer the following questions if you fill in the payoff matrix below. Joe is the owner of the PetroCanada Mini Mart,Sam is the owner of the BP Mini Mart,and together they are the only gas stations in town.At the current price of $1 per litre,each receives total revenue of $1000.Joe is considering cutting his price to 90 cents per litre,which would increase his total revenue to $1350.If Sam's price remains at $1 per litre after Joe cuts his price,Sam will collect $500 in revenue.If Sam cuts his price to 90 cents per litre,his total revenue would also rise to $1350 if Joe continues to charge $1 per litre.Joe will collect $500 in revenue if he keeps his price at $1 per litre while Sam lowers his to 90 cents per litre.Joe and Sam will receive $900 each in total revenue if they both lower their price to 90 cents per litre.You may find it easier to answer the following questions if you fill in the payoff matrix below. -Refer to the information given above.To Sam,cutting his price to 90 cents per litre is a(n) A) submissive strategy. B) dominant strategy. C) dominated strategy. D) disequilibrium. E) profit-maximizing strategy. -Refer to the information given above.To Sam,cutting his price to 90 cents per litre is a(n)


A) submissive strategy.
B) dominant strategy.
C) dominated strategy.
D) disequilibrium.
E) profit-maximizing strategy.

F) A) and B)
G) A) and C)

Correct Answer

verifed

verified

Which of the following would NOT solve a commitment problem?


A) A credible threat.
B) Custom and tradition.
C) A credible promise.
D) An empty ultimatum.
E) A preference for honesty.

F) A) and B)
G) All of the above

Correct Answer

verifed

verified

-The market demand shown in the diagram above represents the demand curve shared by two non-collusive and independent firms of equal size and efficiency,each with zero marginal cost.If neither of the existing firms wants to change the situation,to ensure a stable and profitable market for both firms,each firm will produce ___ bottles/day and each will charge a price of ____/bottle. A) 1100;$0.90 B) 1000;$0.90 C) 1000;$1.00 D) 500;$1.00 E) 500;$1.50 -The market demand shown in the diagram above represents the demand curve shared by two non-collusive and independent firms of equal size and efficiency,each with zero marginal cost.If neither of the existing firms wants to change the situation,to ensure a stable and profitable market for both firms,each firm will produce ___ bottles/day and each will charge a price of ____/bottle.


A) 1100;$0.90
B) 1000;$0.90
C) 1000;$1.00
D) 500;$1.00
E) 500;$1.50

F) A) and C)
G) B) and E)

Correct Answer

verifed

verified

Showing 1 - 20 of 165

Related Exams

Exam 1

Thinking Like an Economist

201 Questions

Exam 2

Comparative Advantage: the Basis for Exchange

138 Questions

Exam 3

Supply and Demand: an Introduction

175 Questions

Exam 4

Demand: the Benefit Side of the Market

172 Questions

Exam 5

Perfectly Competitive Supply: the Cost Side of the Market

177 Questions

Exam 6

Efficiency and Exchange

114 Questions

Exam 7

The Quest for Profit and the Invisible Hand

221 Questions

Exam 8

Monopoly and Other Forms of Imperfect Competition

236 Questions

Exam 10

Externalities and Property Rights

196 Questions

Exam 11

The Economics of Information

183 Questions

Exam 12

Labour Markets

191 Questions

Exam 13

The Economics of Public Policy

111 Questions

Exam 14

Public Goods and Taxation

156 Questions

Exam 15

Income Distribution

148 Questions

Show Answer