Micro HW #15
A collusive agreement creates a game like the prisoners' dilemma because _______. A. the outcome is worse than if both firms held to the agreement B. collusion is illegal and the players will end up in jail if caught C. the outcome is better than if both firms held to the agreement D. collusion is illegal and the players will end up with the maximum jail time
A
A contestable market is a market in which firms _____ so easily that firms in the market _____ competition from potential entrants. A. can enter and leave; face B. make economic profits; face C. can enter and not leave; face D. cannot enter and leave; do not face
A
If a prisoners' dilemma game is played repeatedly, the players can employ _________ strategy. Playing the game repeatedly _______. A. a tit-for-tat or a trigger; may result in a cooperative equilibrium B. a dominant or a Nash; does not change the equilibrium. In a prisoners' dilemma, the players never attain the best outcome C. a contestable or a limit; may result in a cooperative equilibrium D. a tit-for-tat or a trigger; results in one playing cheating and one playing complying
A
The Nash equilibrium for the prisoners' dilemma is called a dominant-strategy equilibrium, which is an equilibrium in which the best strategy of each player is to _____ the strategy of the other player. A. cheat (confess) regardless B. cheat (confess) without taking into account C. confess (cheat) regardless D. confess (cheat) without taking into account
A
The common features of all games are _______. A. rules, strategies, payoffs, and an outcome B. strategies, an outcome, and either a virtual or real gameboard C. winners, losers, rules, strategies, and an outcome D. winners, losers, and an outcome
A
The equilibrium of the game is that player I ______ and player II ______. A. lies; lies B. tells the truth; tells the truth C. tells the truth; lies D. lies; tells the truth
A
A cooperative equilibrium is one in which the players _____. A. minimize economic losses B. make and share the monopoly profit C. maximize economic profits D. share normal profits
B
A market in which firms can enter and leave so easily that firms in the market face competition from potential entrants is a _______ market. A. cooperative B. contestable C. perfectly competitive D. potential
B
A market that is contestable has a ______ price and produces a ______ quantity than a monopoly. A. higher; smaller B. lower; greater C. higher; greater D. lower; smaller
B
A _____ costly strategy, called limit pricing, sets the price at the _____ level that inflicts a loss on the entrant. A. less; lowest B. less; highest C. more; lowest D. more; highest
B
Firms in oligopoly are interdependent because _______. A. each firm produces a very small percentage of the market output B. each firm's actions influence the profits of all the other firms C. an oligopoly market has barriers to entry D. the average total cost curve is downward-sloping along the relevant range of output
B
Firms in oligopoly face a temptation to collude because collusion _______. A. is a legal means of increasing economic profit B. allows firms to act like a monopoly and increase their profits C. leads to a more competitive market D. is a stable means of making long-run maximum economic profit
B
In game theory, strategies include _______. A. only the winning action of each player B. all possible actions of each player C. all possible actions and payoffs of each player D. the payoff matrix
B
In the prisoners' dilemma R&D game, a firm can use the R&D _______. The outcome is that _______. A. if either it or its competitor conducts the R&D; one firm conducts R&D; B. only if it conducts the R&D; both firms undertake R&D; C. only if it conducts the R&D; one firm conducts R&D; D. if either it or its competitor conducts the R&D; neither firm undertakes R&D;
B
The Nash equilibrium is that ______. A. only Ben develops the new product B. both Amy and Ben develop the new product Your answer is correct. C. neither Amy nor Ben develops the product D. only Amy develops the new product
B
The two distinguishing characteristics of oligopoly are _______. A. no barriers prevent the entry of new firms, and a large number of firms compete B. natural or legal barriers prevent the entry of new firms, and a small number of firms compete C. natural or legal barriers prevent the entry of new firms, and a large number of firms compete D. no barriers prevent the entry of new firms, and a small number of firms compete
B
Which of the following is an example of a duopoly market? A. The city of Portland has three major cab service companies. B. Visa and MasterCard exercise control over the electronic payment processing market in the world. C. Boeing, Airbus, and Bombardier are the three aircraft manufacturing companies in the world. D. DeBeers controls 70 percent of the market share in diamonds and the rest is shared by a few other companies.
B
A cartel is a group of firms acting together to _____ output, _____ price, and increase _____. A. increase; raise; economic profit B. increase; raise; marginal revenue C. limit; raise; economic profit D. limit; lower; total revenue
C
A collusive agreement is an agreement between two (or more) producers to form a cartel to _____ output, _____ the price, and _____. A. increase; lower; increase profits B. increase; raise; increase revenue C. restrict; raise; increase profits D. restrict; lower; lower costs
C
A duopoly occurs when _______. A. several producers of two goods compete in a competitive market B. one producer of two goods sells the goods in a monopoly market C. two producers of a particular good compete in the same market D. two producers of two different goods compete in an oligopoly market
C
A payoff matrix is a table that shows the payoffs for each player for every possible combination of _____ the players. A. costs of B. profits of C. actions by D. collusion by
C
At the Nash equilibrium, Novo's economic profit is ______ million and Pharm's economic profit is ______ million. A. $15; $15 B. $50; −$3 C. $10; $10 D. −$3; $50
C
Find the equilibrium of the game. The Nash equilibrium is that Black _____ and White _____. A. keeps agreement; breaks agreement B. keeps agreement; keeps agreement C. breaks agreement; breaks agreement D. breaks agreement; keeps agreement
C
Game theory is the tool that economists use to analyze strategic behavior - behavior that recognizes _____ and _____ account of the expected behavior of others. A. mutual interdependence; does not take B. collusion; takes C. mutual interdependence; takes D. competition; takes
C
In a repeated game, punishments that result in heavy damages are an incentive for players to adopt the strategies that result in a _______ equilibrium. A. competitive B. Nash C. cooperative D. strategic
C
In the prisoners' dilemma game, each player faces _______. A. three strategies, confess, deny, or keep silent, and there are two possible outcomes B. three strategies, confess, deny, or keep silent, and there are four possible outcomes C. two strategies, confess or deny, and there are four possible outcomes D. two strategies, confess or deny, and there is only one possible outcome
C
Nash equilibrium is an equilibrium in which each player takes the best possible action _____ the action of the other player. A. without taking account of B. to lower costs, given C. given D. to compete with
C
Oligopoly is a market in which a _____ number of _____ firms compete. A. small; independent B. large; interdependent C. small; interdependent D. large; independent
C
The strategies are _______. A. receiving $100 or receiving $50 B. playing the game or not playing the game C. answering honestly or answering with a lie D. receiving $500 or receiving nothing
C
Which of the following goods and services are produced in an oligopoly market? A. electricity B. bottled water C. dog food D. smartphones
C
Firms do not succeed in raising price and profits because each firm ______. A. makes greater economic profit if it complies with the agreement, regardless of how the other firm acts B. wants to maximize economic profit C. supports the social interest and keeps prices low D. makes greater economic profit if it cheats on the agreement, regardless of how the other firm acts
D
Firms in a collusive agreement have an incentive to cheat and increase production because _______. A. when one firm cheats, other firms incur an economic loss and they leave the market. The remaining firm increases its economic profit in the long run B. economic profit is maximized when all firms cheat on the agreement C. cheating is a short-run solution to a long-run problem D. the profit received by a cheating firm when all other firms comply is greater than the profit received when all firms comply
D
Firms in a collusive agreement have an incentive to cheat because _______. A. when the total collusive agreement breaks down, consumers will remember the one firm that gave them a better deal and will remain loyal in the long run B. cheating decreases costs and increases economic profit C. the chances of being caught by the other firms is small D. the profit received by a cheating firm when all other firms comply is greater than the profit received when all firms comply
D
If this game is played just once, the Nash equilibrium is ______. A. Pat breaks the collusion and Danny colludes B. both Pat and Danny collude C. Pat colludes and Danny breaks the collusion D. both Pat and Danny break the collusion
D
In a duopoly with a collusive agreement to restrict output and raise the price, a firm's best strategy is to ______ if the other firm complies, and to ______ if the other firm cheats. A. comply; cheat B. comply; comply C. cheat; comply D. cheat; cheat
D
In a duopoly with a collusive agreement, a firm's best strategy is to ______, and to ______. A. comply if the other firm cheats; cheat if the other firm complies B. comply if the other firm complies; comply if the other firm cheats C. comply if the other firm complies; cheat if the other firm cheats D. cheat if the other firm complies; cheat if the other firm cheats
D
In an R&D game of chicken, _______. A. an outcome with both firms doing R&D is a Nash equilibrium B. the Nash equilibrium is unique C. an outcome with no firm doing R&D is a Nash equilibrium D. there are two Nash equilibrium outcomes
D
In an R&D game of chicken, a firm can use the R&D _______. The outcome is that _______. A. only if it conducts the R&D; one firm conducts R&D B. only if it conducts the R&D; both firms undertake R&D C. if either it or its competitor conducts the R&D; both firms undertake R&D D. if either it or its competitor conducts the R&D; one firm conducts R&D
D
In the prisoners' dilemma, the _______ gives the equilibrium as _______. A. payoff matrix; jail time of 2 years for both prisoners B. strategy matrix; a good outcome for both players C. strategy table; a bad outcome for only one player D. payoff matrix; a bad outcome for both players
D
In the prisoners' dilemma, when each player takes the best possible action given the action of the other player, _______. A. one player denies and one player confesses B. both players deny C. each player receives the best outcome possible D. a Nash equilibrium is reached
D
The Nash equilibrium delivers a bad outcome for both players because _______. A. regardless of what the other prisoner does, the best strategy for each prisoner is to deny B. the game does not have a dominant-strategy equilibrium C. player collusion results in both players confessing D. regardless of what the other prisoner does, the best strategy for each prisoner is to confess
D
The equilibrium strategy for each firm in a duopolists' dilemma is to _______. A. comply with the agreement B. do nothing C. wait until the other firm acts D. cheat on the agreement
D
This game _______ similar to the prisoners' dilemma because _______. A. is not; players do not play the dominant strategy B. is; players do not play the dominant strategy C. is not; players do not receive the greatest payoff D. is; players do not receive the greatest payoff
D
Which of the following goods and services are produced in an oligopoly market? Question content area bottom Part 1 A. bottled water B. smartphones C. natural gas distribution D. automobiles
D
Which of the following is an example of strategies? A. Chinese companies are facing rising labor costs. B. Procter and Gamble has recorded an increase in profits in the last two quarters. C. Amec has two waste water treatment plants in Texas. D. Dell makes an annual economic profit of $5 billion by investing in R&D and an economic profit of $6 billion by not investing in R&D.
D
