Economics 202 Chapter 8,9, 10

In traditional economic models, homo economicus is assumed to be all of the following except

altruistic **Homo economicus include- a satisficer, a behavioral economist, homo economicus**

A strategy that limits defection in a repeated prisoner's dilemma game is

A tit-for-tat strategy

A good is characterized by network economies if it

Becomes more valuable as more people own it

Patents, which confer market power, are intended to

Encourage innovation by helping firms recoup the costs of research and deve

One criticism of the present-aim standard of rationality is that it

can be used to virtually "explain" any bizarre behavior

Psychological incentives

can serve as commitment devices

A coalition of firms who agree to restrict output for the purpose of earning an economic profit is called a

cartel

In the realm of public policy, loss aversion makes it

difficult to enact policy changes

Impulse control problems arise when people

discount the future too heavily

Which of the following firms is most likely to be a pure monopolist?

The only gas station in a small, isolated town

The ____ is a game in which the first player has the power to confront the second player with a take-it-or-leave-it offer

Ultimatum bargaining game

In traditional economic models, which of the following does NOT describe homo economicus?

impulsive ** Well-informed, cognitively sophisticated, narrowly self-interested**

Government programs aimed at stimulating personal savings

increase welfare if people discount the future too heavily

If an entity if fungible, then its individual units are

interchangeable

If a natural monopoly decreases the quantity of output it produces, then

its average cost will increase

Given the demand curve it faces, if an imperfectly competitive firm wants to sell another unit of output, it must:

lower its prices

The reason economist consider monopoly to be socially undesirable is that monopolist

produce less than the socially optimal level of output

"Market Power" refers to a firms ability to

raise its price without losing all of its sales

___ is the phenomenon that unusual events are likely to be followed by more nearly normal ones.

regression to the mean

Judgemental and decision heuristics are

rule of thumb that reduce computation costs

Which of the following is NOT an example of a good with network economies?

A computer printer

If a firms total revenue is $112 when it sells 16 units, $119 when it sells 17 units and $126 when it sells 18 units,

A perfectly competitive firm

Emotions like guilt and sympathy

Can solve commitment problems

A credible promise is

In the promiser's interest to keep

A good with network economies

Internet service A cell pone Facebook

The monopolist will maximize profits at the output level for which

Marginal revenue equals marginal cost

The primary objective of an imperfectly competitive firm is to

Maximize profit

Industries in which firms have high fixed costs and low marginal costs are likely to have a

Small number of large firms

In sequential games, the player who moves first

Sometimes has an advantage and sometimes has a disadvantage

Game theory provides tools that are used to model:

Strategic interdependencies

A pure monopoly exist when

a single firm produces a good with no close substitutes

Traditional economic models assume that people care about

absolute consumption

According to the representative heuristic, If roger has many of the characteristics of a millionaire, then people will

be more likely to think that he is a millionaire

Evidence suggests that as the importance of what's at stake grows, loss aversion

becomes even more pronounced

A natural monopoly is a monopoly that arises from

economies of scale

A decision tree is used when modeling

games in which timing matters

Status quo bias is the

general resistance to change, often stemming from loss aversion

A monopolistically competitive firm is one

of many firms that sell products that are close but not perfect substitutes.

The use of psychological incentives to solve commitment problems would be least effective in games played

once between strangers

A purely self-interested diner is more likely to tip

only when dining in a restaurant at which he often eats

According to the textbook, the owners of restaurants encourage tipping in order to

solve a commitment problem with their wait staff

The three elements of a game are

the players, the strategies and the payoffs