Econ Test # 2

In the "original" version of the Prisoners' Dilemma (where there are two prisoners), if Prisoner 1 does not confess, then Prisoner 2 a. can be better off if they confess b. will not be interrogated by the police c. will receive no punishment by also not confessing d. will have to confess or else receive the most severe punishment e. none of the above

a. Can be better off if they confess

How should you respond to Visionary? a. Immediately start production of phones with the Bluetooth communication, knowing it would be impossible to change production. b. Promise to use infrared, and do it. c. Promise to use infrared, but switch to Bluetooth. d. Agree that both firms will use the least expensive method e. Pull out of the agreement to development the new technology.

a. Immediately start production of phones with the Bluetooth communication, knowing it would be impossible to change production.

Is a price taker a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

a. Perfect Competition

Is economically efficient a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

a. Perfect Competition

Is made up of many small firms who produce identical products a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

a. Perfect Competition

Does NOT make profit in the long run a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

a. Perfect Competition AND c. Monopolistic Competition and sometimes d.

This strategic play could allow you to win the game of chicken a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

a. Pre-commitment

You communicate to your opponent that you will undertake a particular action no matter what your opponent plans on doing. a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

a. Pre-commitment

You're playing a Battle of the Sexes game (it is in both your self-interests to do the same thing). You want to take a vacation to Mexico. Your partner wants to go to Canada. You tell your opponent, "if you go to Canada, I'm going to go to Mexico by myself." This statement is an example of what? a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

a. Pre-commitment

"Tit for tat" is one of the best strategies for playing multi-round versions of this game. a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

a. Prisoners' Dilemma

A main issue of this game is that though each player would like to cooperate, they'd also like to break that cooperation if it were to happen. a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

a. Prisoners' Dilemma

In this game, both players may promise to do the same thing, but each fears the other will break that promise. a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

a. Prisoners' Dilemma

In this game, players are likely to promise to do one thing, but then do something different. a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

a. Prisoners' Dilemma

Which game would best symbolize two football organizations that are both negotiating with a group of players to sign with their teams. a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

a. Prisoners' Dilemma

Which is the following is a simultaneous game a. Rock, Paper, Scissors b. Tic-Tac-Toe c. Chess d. Monopoly e. All of the above are simultaneous games

a. Rock, Paper, Scissors

Contestable Market Theory suggests that a. an oligopolistic or monopolistic industry will still be efficient if the market is contestable b. a monopolistic industry will become oligopolistic if a firm contests it c. a market can only be monopolized if it can withstand a contest d. oligopolistic firms will cheat on collusion agreements e. oligopolistic firms will collude if firms have an incentive to trust one another

a. an oligopolistic or monopolistic industry will still be efficient if the market is contestable

Monopolistic Competitors are different than Perfectly Competitive Firms because Monopolistic Competitors a. face a downward sloping demand curve b. can make profit in the long run c. can make profit in the short run d. have significant barriers to entry e. identical products

a. face a downward sloping demand curve Monopolistic competitors have downward sloping demand curves, while perfectly competitive firms have flat or horizontal (perfectly elastic) demand curves.

Which of the following is NOT an assumption about perfectly competitive firms? a. Firms produce heterogeneous products b. There are no barriers to entry or exit c. Everyone has full information d. The firm is a price taker e. There are many firms in the industry

a. firms produce heterogeneous products In perfect competition, all firms produce identical products.

Zero-sum games are a. games of pure conflict b. the most common and realistic games c. the economically most interesting games d. games that offer the possibility of no one losing e. all of the above

a. games of pure conflict

Monopolistically competitive firms are different from perfectly competitive firms because monopolistically competitive firms a. have some control over the price of their product. b. can earn profits in the long run c. have barriers to entry d. produce homogeneous goods e. are few in number in the industry

a. have some control over their price

With an increase in demand, in the long run, price will _______ in an increasing-cost industry and ________ in a decreasing-cost industry a. rise; fall b. stay the same; stay the same c. rise; stay the same d. stay the same; rise e. fall; rise

a. rise; fall

The short run supply curve of a competitive firm is a. the MC curve above the shut down point b. the ATC curve c. the ATC curve above MC d. the MR curve e. nonexistent

a. the MC curve above the shut down point A firm produces where P = MC unless P is below the shut down point, so the supply curve is MC above the shutdown point (AVC)

In an increasing cost industry, the long run supply curve is ________, and in a decrease cost industry, the long run supply curve is _________ a. upward sloping; downward sloping b. downward sloping; upward sloping c. perfect inelastic; elastic d. elastic; perfectly inelastic e. vertical; horizontal

a. upward sloping; downward sloping

A profit maximizing sole proprietorship has revenue of $210,000. Employee costs are $50,000. Rent is $24,000. Materials are $65,000. Interest is $12,000. Besides the loan, the owner also invested $50,000 of her own money on which she could have received an interest rate of 6%. The owner quit an $80,000 a year job to start this business. In the above scenario, implicit costs are a. $80,000 b. $83,000 c. $120,00 d. $123,000 e. $281,000

b. $83,000 80K in opportunity cost of the owners time, and 3k in the opportunity cost of the 50k investment

Continuing with the previous question, how should you respond to Visionary's overture? a. Tell them you'll jump right on that technology, but then do nothing b. Ask to see what work they've done so far, then set a meeting three months from now for both firms to compare progress c. Ignore / dismiss Visionary, fearing it might be construed as illegal collusion d. Take turns developing the technology e. Say you won't develop the technology, but do it anyway in secret

b. Ask to see what work they've done so far, then set a meeting three months from now for both firms to compare progress

Which of the following is not a characteristic of monopolistic competitors? a. There are no barriers to entry b. Firms produce a homogeneous product c. Individual firms face a downward sloping demand curve d. Firms can make a profit in the short run e. Firms breakeven in the long run

b. Firms produce a homogenous product Monopolistically competitive firms produce different, or heterogenous products, not the same products

produces a product for which there is no close substitution, and there are significant barriers to entry a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

b. Pure Monopoly

There are barriers to entry a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

b. Pure Monopoly AND d. Oligopoly

A main issue of this game is assurance - that is, each player needs to be assured that the other player will do what they promise. a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

b. Stag Hunt

You work for the firm Acme electronics which makes cell phones. The firm Visionary TV's, a maker of TV sets, contacts you and wants their firm and Acme to work together on a joint project. The project would allow your cell phones and their TV's to work together. The joint project requires both firms to spend millions of dollars in development. If both firms do this, consumers will value Acme's phones more and profits will rise. However, if only Acme develops the technology and Visionary does nothing, the new technology has no value, and Acme will lose the amount of the development cost. This is an example of which game? a. Prisoners' Dilemma b. Stag Hunt c. Battle of Sexes d. Chicken

b. Stag Hunt

In chess, a best strategy has never been found because a. There's no Nash equilibrium b. There are so many different possible outcomes, it's been impossible to reason backwards the best strategy c. The optimal strategy is a mixed strategy which means you never do the same thing d. It is a simultaneous game so there is no reasoning backwards e. Chess involves humans who are occasionally irrational

b. There are so many different possible outcomes, it's been impossible to reason backwards the best strategy

If playing multiple rounds of a Prisoners' Dilemma, the best strategy seems to be a. Tit for tat b. Tit for tat but with added forgiveness c. Nash Equilibrium d. Dominant Strategy e. Mixed strategy

b. Tit for tat but with added forgiveness

You communicate to your opponent that you will under specific circumstance undertake some action that will harm them, and it's in your self-interest to follow through and carry out the action a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

b. Warning

You're playing a Prisoners' Dilemma game (such as in Table 4). You tell your opponent that if they defect, you will defect too and you both will be worse off. This statement is an example of what? a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

b. Warning

For strategic plays like commitments, threats, and promises to be effective, they must be a. not credible b. announced to your opponent c. kept secret d. mixed with other strategies e. all of the above

b. announced to your opponent

The MR for a competitive firm is a. zero b. equal to the market price of the good c. declining at an increasing rate d. declining at a decreasing rate e. equal to ATC

b. equal to the market price of the good

In a perfectly competitive industry, the demand curve the firm sees is a. vertical b. horizontal c. downward sloping d. upward sloping e. perfectly inelastic

b. horizontal The firm is a price taker, graphically shown as a perfectly flat or perfectly elastic demand curve

Resources are limited in this industry; so, as more firms enter, the cost of production gets bid up. This describes a. diminishing returns b. increasing cost industry c. decreasing cost industry d. economies of scale e. diseconomies of scale

b. increasing cost industry

Examples of non zero-sum games are a. very rare so they are not analyzed b. probably most common, so they need to be studied c. mathematically equivalent to zero-sum games d. impossible to describe mathematically e. always of a "win-lose" variety

b. probably most common, so they need to be studied

Which of the following is NOT an obstacle to collusion? a. firms may cheat b. there are high barriers to entry c. legal restrictions d. there are a large number of firms in the industry e. all of the above are obstacles to collusion

b. there are high barriers to entry

In the "original" version of the Prisoners' Dilemma (where there are two prisoners), if one prisoner confesses, the other prisoner a. should not confess b. will want to confess to avoid a severe punishment c. will get off without punishment d. will not confess to avoid a long sentence e. cannot do anything because the first prisoner already confessed

b. will want to confess to avoid a severe punishment

A profit maximizing sole proprietorship has revenue of $210,000. Employee costs are $50,000. Rent is $24,000. Materials are $65,000. Interest is $12,000. Besides the loan, the owner also invested $50,000 of her own money on which she could have received an interest rate of 6%. The owner quit an $80,000 a year job to start this business. In the above scenario, opportunity costs are a. $136,000 b. $221,000 c. $234,000 d. $281,000 e. $284,000

c. $234,000 The explicit costs of accounting are 151K, and the implicit costs are 83K, so opportunity cost is 234K.

A profit maximizing sole proprietorship has revenue of $210,000. Employee costs are $50,000. Rent is $24,000. Materials are $65,000. Interest is $12,000. Besides the loan, the owner also invested $50,000 of her own money on which she could have received an interest rate of 6%. The owner quit an $80,000 a year job to start this business. In the above scenario, accounting profit is a. $-71,000 b. $9,000 c. $59,000 d. $71,000 e. $136,000

c. $59,000 Accounting profit = TR - Explicit Costs Accounting profit = 210,000 - 151,000 Accounting profit = 59,000

A profit maximizing sole proprietorship has revenue of $210,000. Employee costs are $50,000. Rent is $24,000. Materials are $65,000. Interest is $12,000. Besides the loan, the owner also invested $50,000 of her own money on which she could have received an interest rate of 6%. The owner quit an $80,000 a year job to start this business. In the above scenario, the total of explicit costs is a. $74,000 b. $139,000 c. $151,000 d. $201,000 e. $281,000

c. 151,000 Total of materials, rent, employees, and interest.

A main issue of this game is the two players agreeing upon which cooperating equilibrium will be chosen a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

c. Battle of the Sexes

A possible solution to this game is to take turns on which cooperating equilibrium is chosen. a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

c. Battle of the Sexes

Both the Democrat and Republican parties benefit if the US is doing well, but each party would prefer the US to do well in slightly different ways. This description suggests the game between the Democrats and Republicans is most like this game. a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

c. Battle of the Sexes

Continuing on with the previous questions, both firms have embarked on the new technology. It turns out there are two ways it could be done. The technology could use infrared communication which would be cheaper and more profitable for Visionary. Alternatively, the technology could use Bluetooth communication which would be cheaper and more profitable for Acme. If the firms choose different communication methods, it won't work at all. Choosing which communication method is an example of which game? a. Prisoners' Dilemma b. Stag Hunt c. Battle of Sexes d. Chicken

c. Battle of the Sexes

Which of the following is an important characteristic of monopolistic competitors? a. Each firm is large and comprises a significant share of the market b. Each firm is like a small monopoly that makes profit in the long run c. Each firm produces a good that is different from what other firms are producing in that industry d. There are large barriers to entry that keep new firms out e. The demand curve that each firm faces is perfectly elastic

c. Each firm produces a good that is different from what other firms are producing in that industry

In a perfectly competitive industry, the position of the long run supply curve is determined by a. demand b. shut down point c. minimum of long run average cost d. diminishing returns e. bottom of MC or highest point of MP

c. Minimum of long run average cost (LRAC)

The wine industry is made up of many firms. Each winery spends money to make itself stand out and develop consumer loyalty. The wine industry would be best analyze using this model a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

c. Monopolistic Competition

There is a decrease in demand in a perfectly competitive industry. Which of the following does NOT happen in the long run (from the short run equilibrium) a. The market price rises b. Firms will break even c. New firms enter the industry d. Quantity produced in the industry decreases e. Quantity produced by each firm increases

c. New firms enter the industry In the short run, price falls which creates losses. This will cause a firm to exit in the long run, not enter.

To maximize profit, a competitive firm should produce the quantity where a. MC = ATC b. P = ATC c. P = MC d. P = AVC e. P = MR

c. P = MC

A game like chess where players take alternating turns making decisions is this type of game a. Strategic game b. Prisoners game c. Sequential game d. Turn after turn game e. All of the above

c. Sequential game

Firms will enter an industry that has no barriers to entry if a. there are no economic losses b. there are accounting profits c. there are economic profits d. there are no accounting losses e. there is a normal accounting profit

c. There are economic profits

A profit maximizing sole proprietorship has revenue of $210,000. Employee costs are $50,000. Rent is $24,000. Materials are $65,000. Interest is $12,000. Besides the loan, the owner also invested $50,000 of her own money on which she could have received an interest rate of 6%. The owner quit an $80,000 a year job to start this business. Given the above scenario, economics predicts a. this firm will shut down in the short run b. new firms will enter the industry c. this firm will exit in the long run d. the owner will raise the price of their good e. the "normal" profit will increase

c. This firm will exit in the long run

You communicate to your opponent that you will under specific circumstance undertake some action that will harm them, but it's not in your self-interest to follow through and carry out the action a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

c. Threat

Games in which the winnings of one player are equal to the losses of the other players a. are properly called puzzles, not games b. are impossible to analyze c. are called zero-sum games d. are called simultaneous games e. do not have a Nash equilibrium

c. are called zero-sum games

As competition enters a monopolistically competitive industry, a firm in that industry will observe their demand curve a. decrease and become more inelastic b. increase and become more inelastic c. decrease and become more elastic d. increase and become more elastic e. decrease and become perfectly inelastic

c. decrease and become more elastic Demand shifts left (decreases) and flattens (more elastic)

In a perfectly competitive industry, the market demand curve is a. Vertical b. horizontal c. downward sloping d. upward sloping e. perfectly inelastic

c. downward sloping Although each firm is a price taker and faces a horizontal (perfectly elastic) demand curve. The demand curve for the industry as a whole slopes downward like any normal demand curve

In the "original" version of the Prisoners' Dilemma (where there are two prisoners), the dominant strategy a. does not exist b. has both prisoners remaining silent and not confessing to reduce punishment c. has each prisoner confessing which always seems better no matter what the other prisoner does d. leads to collusion between the two prisoners e. all of the above

c. has each prisoner confessing with always seems better no matter what the other prisoner does

When more firms enter a competitive industry, the short run industry supply curve will a. become more steep b. shift to the left c. increase d. move downward e. become perfectly elastic

c. increase

In sequential games, a suggestion for finding a best possible action is to a. find a dominant strategy b. find a Nash equilibrium c. look forward and reason backward d. always take the path of least resistance e. chart the middle course

c. look forward and reason backward

There is an increase in demand in a perfectly competitive industry. Which of the following does NOT happen in the short run a. The market price rises b. Firms will make economic profits c. New firms enter the industry d. Quantity produced in the industry increases e. Quantity produced by each firm increases

c. new firms enter the industry New firms cannot enter in the short run.

Which of the following actions would NOT be a strategy a monopolistically competitive firm would use to gain economic profits? a. offer exceptional customer service b. differentiate their good c. offer a special low sale price d. develop a brand name e. advertise their good

c. offer a low sale price Monopolistically competitive firms try to compete by making themselves different from other firms, not by lowering their prices.

Players in a Prisoners' Dilemma game are more likely to choose the cooperative strategy if a. the gains from defection is very large b. players can communicate in advance c. one player pre-commits d. the game is played in multiple rounds e. the game is simultaneous

c. one player pre-commits

A competitive firm is a price taker because a. they sell at a profit maximizing price b. MC = MR c. the firm is small and insignificant d. there are barriers to entry e. all of the above

c. the firm is small and insignificant Because the firm is so small compared to the market as a whole, the firm cannot control the market price.

The short run supply curve of a competitive industry is a. perfectly elastic b. perfectly inelastic c. the sum of the firms' supply curves d. equal to the average cost of all firms e. the same as the supply curve of the largest firm in the industry

c. the sum of the firms' supply curves

Which of the following is NOT a characteristic of oligopolies? a. "game theory" is useful to understand firm behavior b. firms are mutually interdependent c. there are many firms in an oligopolistic market d. there are significant barriers to entry e. firms may try to collude to increase profits

c. there are many firms in an oligopolistic market

A perfectly competitive firm a. can attract more customers by pricing below the market price b. can increase profits by lowering her price. c. will lose all of its customers if it prices above the market price d. can increase its total revenue by pricing above the market price e. can increase its total revenue by decreasing her price below the market price

c. will lose all of its customers if it prices above the market price

The long run supply curve in a perfectly competitive industry is (assuming constant cost industry) a. sum of all firms' supply curves b. downward sloping if there are economies of scale c. vertical if there are finite resources d. perfectly elastic e. U-shaped

d. Perfectly elastic In a constant-cost industry, the long run supply curve is perfectly horizontal at the break-even point (bottom of LRAC)

There is a decrease in demand in a perfectly competitive industry. Which of the following happens in the short run a. The market price rises b. Firms break even c. Firms exit the industry d. Quantity produced in the industry decreases e. Quantity produced by each firm increases

d. Quantity produced in the industry decreases As demand falls, price will fall. With the decrease in price, each firm will produce less, causing a decrease in quantity supplied in the industry

In game theory, a "mixed strategy" means the player should a. choose a different strategy than your opponent b. choose the same strategy as your opponent c. choose a strategy other than the Nash equilibrium and other than the dominant strategy d. alternate which strategy you pick from round to round e. create a new middle strategy that's in the middle of your current strategies.

d. alternate which strategy you pick from round to round

Monopolistic Competitors are different than Monopolies because Monopolistic Competitors a. make profit in the long run but not the short run b. face a perfectly elastic demand curve, not a downward sloping one c. cannot make profit in the short run or long run d. breakeven in the long run e. have MR = P

d. breakeven in the long run

Monopolistically competitive firms are different from monopolies because monopolistically competitive firms a. make profits in the long run b. are price takers c. have barriers to entry d. face competition in the long run e. have a downward sloping demand curve

d. face competition in the long run Monopolies have barriers to entry, thus do not have competition in the long run.

A perfectly competitive industry will move along a long run supply curve by a. increases or decreases in the price b. each representative firm producing more or less in the short run c. each representative firm producing more or less in the long run d. firms entering or exiting the industry e. changes in technology

d. firms entering or exiting the industry

Which of the following statements about the perfectly competitive firm is NOT true? a. The demand curve the firm sees is perfectly elastic b. There is easy entry into, and exit from, the market c. MR = P d. If a firm cuts production, it will drive the price of the good up e. There are many firms

d. if a firm cuts production, it will drive the price of the good up If a firm cuts production, the change in the market is so small, it won't have an impact on market price.

If a firm is making a zero economic profit, it a. will exit the industry in the long run b. other firms in the industry will exit in the long run c. is doing better than the alternative d. is doing just as well to the alternative e. is making an abnormally large accounting profit which attracts competition in the long run

d. is doing just as well to the alternative

Game theory is a. economic theory of people having fun b. economic theory of people utilizing leisure time c. mathematical analysis of models of cooperation and conflict between rational decision makers d. mathematical and economic analysis of decisions involving random, chance events e. economic theory of using games to increase productivity of workers

d. mathematical analysis of models of cooperation and conflict between rational decision makers

Continuing with the above question, how should you respond to Cell-Gamma? a. Promise to advertise, but don't b. Promise to advertise, and do c. Make no commitment d. Wait and see e. Explain that you had just fired your advertising firm, so it would be impossible for Acme to combat the X-5 technology right then

e. Explain that you had just fired your advertising firm, so it would be impossible for Acme to combat the X-5 technology right then

You communicate to your opponent that you will under specific circumstance undertake some action that will benefit them, but it's not in your self-interest to follow through and carry out the action a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

e. Promise

You're playing a Prisoners' Dilemma game (such as in Table 4). You tell your opponent that if they cooperate, you will cooperate too. This statement is an example of what? a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

e. Promise

There is an increase in demand in a perfectly competitive industry. Which of the following does NOT happen in the long run (from the short run equilibrium) a. The market price falls b. The market supply curve increases c. New firms enter the industry d. Quantity produced in the industry increases e. Quantity produced by each firm increases

e. Quantity produced by each firm increases In the long run, firm production will return to the breakeven point.

In the game Rock, Paper, Scissors, a pure (not mixed) strategy Nash equilibrium is a. Always choose rock b. There are three: both players choosing the same thing, both choosing rock, paper, or scissors. c. There are three Nash equilibriums: you choose rock if the other player chooses scissors, paper if the other player chooses rock, and scissors if the other player chooses paper. d. There are six Nash equilibriums: whenever the players do not choose the same thing because if they choose the same thing, you do the game again. e. There is no pure strategy in Rock, Paper, Scissors that's a Nash Equilibrium

e. There is no pure strategy in RPS that's a Nash Equilibrium

A profit maximizing sole proprietorship has revenue of $210,000. Employee costs are $50,000. Rent is $24,000. Materials are $65,000. Interest is $12,000. Besides the loan, the owner also invested $50,000 of her own money on which she could have received an interest rate of 6%. The owner quit an $80,000 a year job to start this business. In the above scenario, the employee costs are a. an explicit cost b. an accounting cost c. an opportunity cost d. an economic cost e. all of the above

e. all of the above

Games can be made more complicated by a. adding more players than two b. adding more options from which a player can choose c. having more than a single round of play d. having some uncertainty of outcomes e. all of the above

e. all of the above

A profit maximizing sole proprietorship has revenue of $210,000. Employee costs are $50,000. Rent is $24,000. Materials are $65,000. Interest is $12,000. Besides the loan, the owner also invested $50,000 of her own money on which she could have received an interest rate of 6%. The owner quit an $80,000 a year job to start this business. In the above scenario, economic profit is a. $-74,000 b. $-71,000 c. $-52,000 d. $-24,000 e. $-11,000

d. $-24,000 Economic profit is 210K - 234K

A profit just sufficiently large enough to sustain a business in the long run (without attracting competition) is also called a. break even b. zero economic profit c. normal accounting profit d. all of the above e. none of the above

d. All of the above

In the game Stag Hunt (such as in table 1), if you tell your opponent that you will cooperate (hunt the stag), if your opponent also cooperates (hunts the stag), this is an example of what? a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

d. Assurance

You communicate to your opponent that you will under specific circumstance undertake some action that will benefit them, and it's in your self-interest to follow through and carry out the action a. Pre-commitment b. Warning c. Threat d. Assurance e. Promise

d. Assurance

A main issue of this game is that one player wins and the other loses a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

d. Chicken

In this game, both players will promise to do the same thing, but each hopes the other will break that promise. a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

d. Chicken

Which game would best symbolize two football teams playing in the Superbowl a. Prisoners' Dilemma b. Stag Hunt c. Battle of the Sexes d. Chicken

d. Chicken

You are still working for Acme electronics. A competitor of yours, Cell-Gamma, contacts you. Cell-Gamma explains that another, a third, cell phone firm is launching a new technology called "X-5". This third firm is going to advertise that X-5 is faster and better than the 4G technology that both you and Cell-Gamma use. The advertising is a lie. X-5 is not better. If both you and Cell-Gamma remain silent, people will believe the lie and switch to the technology. Acme and Cell-Gamma will lose profit. If either Acme or Cell-Gamma spends a few million on an advertising campaign explaining the inferiority of X-5 technology, both Acme and Cell-Gamma will maintain their level of profit, minus the cost of the information campaign. Even with the added advertising costs, it is more profitable to advertise and repudiate the bogus technology, exposing the lying firm. If both you and Cell-Gamma advertise the inferiority of X-5, the outcome is no better than if only one of you advertises, though both firms now have added costs. This is an example of which game? a. Prisoners' Dilemma b. Stag Hunt c. Battle of Sexes d. Chicken

d. Chicken

The purpose of collusion is to a. Keep the smallest firm in business by making a normal profit b. Charge the highest price possible c. Maximize the largest firm's profits d. Make total profits in the industry the largest e. Create economic efficiency

d. Make total profits in the industry the largest

Barriers to entry keep out all but just a few large firms a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

d. Oligopoly

Game theory is useful to describe this firm interaction a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

d. Oligopoly

Is susceptible to collusion a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

d. Oligopoly

Mutual interdependence is a characteristic of this industry a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

d. Oligopoly

The airline industry is made up of many firms. However, most of the firms are very small and produce very little of the total industry production. Most of the production in the industry is done by a few large firms. Those few large firms would be best analyzed using this model a. Perfect Competition b. Pure Monopoly c. Monopolistic Competition d. Oligopoly

d. Oligopoly