Question 1

A specific investment

Accepted Answer

A) is one that can only be used in a transaction with a single firm. 
B) is an investment that cannot be physically moved, such as an oil refinery. 
C) reduces the possibility of a holdup occurring. 
D) is more expensive than a general investment. 
A) is one that can only be used in a transaction with a single firm. 
B) is an investment that cannot be physically moved, such as an oil refinery. 
C) reduces the possibility of a holdup occurring. 
D) is more expensive than a general investment.

Question 2

The Cournot and Stackelberg models are similar, EXCEPT Cournot ________ and Stackelberg ________.

Accepted Answer

A) sets price; sets output 
B) sets output; sets price 
C) is dynamic; is static 
D) is static; is dynamic 
A) sets price; sets output 
B) sets output; sets price 
C) is dynamic; is static 
D) is static; is dynamic

Question 3

A player that starts at the end of the game and progresses to the first move to determine best responses

Accepted Answer

A) doesn't understand how to play a game. 
B) is acting irrationally. 
C) is using backward induction. 
D) is using the Stackelberg Strategy. 
A) doesn't understand how to play a game. 
B) is acting irrationally. 
C) is using backward induction. 
D) is using the Stackelberg Strategy.

Question 4

When there's uncertainty as to the length of a game,

Accepted Answer

A) cooperation still does not occur, because cooperation unravels at the beginning of the game. 
B) cooperation can potentially occur if trigger strategies are adopted. 
C) firms will cooperate because they treat the game as one that is infinitely repeated. 
D) firms will randomly pick among the Nash equilibria. 
A) cooperation still does not occur, because cooperation unravels at the beginning of the game. 
B) cooperation can potentially occur if trigger strategies are adopted. 
C) firms will cooperate because they treat the game as one that is infinitely repeated. 
D) firms will randomly pick among the Nash equilibria.

Question 5

A dynamic game is a game

Accepted Answer

A) in which the players are highly animated. 
B) that is sequential or repeated. 
C) where the payoffs change frequently. 
D) that has actions instead of strategies. 
A) in which the players are highly animated. 
B) that is sequential or repeated. 
C) where the payoffs change frequently. 
D) that has actions instead of strategies.

Question 6

If Intel moves first and makes a large investment in a chip fabrication plant in Bolivia in exchange for tax credits, Intel has made ________ and Bolivia ________.

Accepted Answer

A) a tactical error; will nationalize the plant 
B) a specific investment; will create the tax credit 
C) a specific investment; has a hostage 
D) a general investment; no longer has to grant the tax credits 
A) a tactical error; will nationalize the plant 
B) a specific investment; will create the tax credit 
C) a specific investment; has a hostage 
D) a general investment; no longer has to grant the tax credits

Question 7

An incumbent firm uses limit pricing

Accepted Answer

A) to set price below a potential rival's marginal cost, thus making entry unprofitable. 
B) to set one price for a quantity of a good below a certain limit, and a second price for purchases above the limit. 
C) when it has no other advantages over a potential rival. 
D) if it is limited in the quantity of inputs it can purchase to produce output. 
A) to set price below a potential rival's marginal cost, thus making entry unprofitable. 
B) to set one price for a quantity of a good below a certain limit, and a second price for purchases above the limit. 
C) when it has no other advantages over a potential rival. 
D) if it is limited in the quantity of inputs it can purchase to produce output.

Question 8

With regard to preventing entry, if identical firms act simultaneously,

Accepted Answer

A) they cannot credibly threaten each other. 
B) they will all incur losses. 
C) only one firm will enter the market. 
D) none of them will enter the market. 
A) they cannot credibly threaten each other. 
B) they will all incur losses. 
C) only one firm will enter the market. 
D) none of them will enter the market.

Question 9

Designing your products with proprietary technology, is a way to

Accepted Answer

A) protect intellectual property. 
B) increase switching costs for your customers. 
C) grandfather in your products. 
D) decrease your marginal cost. 
A) protect intellectual property. 
B) increase switching costs for your customers. 
C) grandfather in your products. 
D) decrease your marginal cost.

Question 10

-The above figure shows the payoff to two gasoline stations, A and B, deciding to operate in an isolated town. Suppose a $30 fee is required to enter the market. If firm A chooses its strategy first, then

Accepted Answer

A) firm A will not enter. 
B) neither firm will enter. 
C) both firms will enter. 
D) firm A will enter and firm B will not. 
A) firm A will not enter. 
B) neither firm will enter. 
C) both firms will enter. 
D) firm A will enter and firm B will not.

Question 11

Deterring entry might require a firm to

Accepted Answer

A) price their product closer to the competitive price than to the monopoly price. 
B) price their product closer to the monopoly price than to the competitive price. 
C) drop output almost to zero to show the consumers "who's boss." 
D) drop price almost to zero to get price below marginal cost. 
A) price their product closer to the competitive price than to the monopoly price. 
B) price their product closer to the monopoly price than to the competitive price. 
C) drop output almost to zero to show the consumers "who's boss." 
D) drop price almost to zero to get price below marginal cost.

Question 12

If there are low barriers to entry, a monopolist

Accepted Answer

A) might undertake investment to lower marginal cost in the face of a potential rival. 
B) will undertake investment to lower marginal cost in order to increase profits. 
C) will not undertake investment to lower marginal cost under any circumstances because profits are lower. 
D) Both A and B. 
A) might undertake investment to lower marginal cost in the face of a potential rival. 
B) will undertake investment to lower marginal cost in order to increase profits. 
C) will not undertake investment to lower marginal cost under any circumstances because profits are lower. 
D) Both A and B.

Question 13

In a Stackelberg oligopoly

Accepted Answer

A) the leader moves first, and the follower chooses its price in the second stage of the game. 
B) the leader moves first, and the follower chooses its output in the second stage of the game. 
C) both firms act simultaneously, but one chooses price and the other output level. 
D) there is no Nash equilibrium. 
A) the leader moves first, and the follower chooses its price in the second stage of the game. 
B) the leader moves first, and the follower chooses its output in the second stage of the game. 
C) both firms act simultaneously, but one chooses price and the other output level. 
D) there is no Nash equilibrium.

Question 14

A holdup problem occurs

Accepted Answer

A) when a financial institution undertakes too little investment in security. 
B) when one firm must make a specific investment and a second firm takes advantage of it. 
C) if the firm that moves second in a Stackelberg game chooses the incorrect output level. 
D) if you are entering into a contract with a government entity. 
A) when a financial institution undertakes too little investment in security. 
B) when one firm must make a specific investment and a second firm takes advantage of it. 
C) if the firm that moves second in a Stackelberg game chooses the incorrect output level. 
D) if you are entering into a contract with a government entity.

Question 15

Behavioral game theory assumes

Accepted Answer

A) people act rationally. 
B) people are subject to biases that cause them to act irrationally. 
C) that people behave differently when playing games than when "playing for real." 
D) people optimize using all available information. 
A) people act rationally. 
B) people are subject to biases that cause them to act irrationally. 
C) that people behave differently when playing games than when "playing for real." 
D) people optimize using all available information.

Question 16

Which of the following is a dynamic game?

Accepted Answer

A) Rock-paper-scissors (Roshambo) 
B) Flipping pennies 
C) Chess 
D) None of the above. 
A) Rock-paper-scissors (Roshambo) 
B) Flipping pennies 
C) Chess 
D) None of the above.

Question 17

Which of the following is a way to deter entry?

Accepted Answer

A) increase costs through legislation that affects only new entrants 
B) raise switching costs for customers that use your products 
C) obtain a patent so that others must license your invention 
D) All of the above. 
A) increase costs through legislation that affects only new entrants 
B) raise switching costs for customers that use your products 
C) obtain a patent so that others must license your invention 
D) All of the above.

Question 18

If firms have different costs and market demand only supports the quantity the incumbent produces, then the incumbent's threat to use limit pricing

Accepted Answer

A) is credible. 
B) is not credible. 
C) would be illegal. 
D) is unable to be determined with the information given. 
A) is credible. 
B) is not credible. 
C) would be illegal. 
D) is unable to be determined with the information given.

Question 19

In the ultimatum game, one reason players don't choose the rational offer is

Accepted Answer

A) that there are too many possible outcomes to reasonably consider. 
B) they are worse off by taking the offer. 
C) most people believe in reciprocity, and will therefore get even if the prosper treats them badly. 
D) that it is not a Nash equilibrium. 
A) that there are too many possible outcomes to reasonably consider. 
B) they are worse off by taking the offer. 
C) most people believe in reciprocity, and will therefore get even if the prosper treats them badly. 
D) that it is not a Nash equilibrium.

Question 20

An example of a game in which a leader moves first, and then the other rivals follow is a ________ game.

Accepted Answer

A) Stackelberg model 
B) Cournot model 
C) finite move 
D) tit-for-tat 
A) Stackelberg model 
B) Cournot model 
C) finite move 
D) tit-for-tat

A specific investment

The Cournot and Stackelberg models are similar, EXCEPT Cournot and Stackelberg .

A player that starts at the end of the game and progresses to the first move to determine best responses

When there's uncertainty as to the length of a game,

A dynamic game is a game

If Intel moves first and makes a large investment in a chip fabrication plant in Bolivia in exchange for tax credits, Intel has made and Bolivia .

An incumbent firm uses limit pricing

With regard to preventing entry, if identical firms act simultaneously,

Designing your products with proprietary technology, is a way to

-The above figure shows the payoff to two gasoline stations, A and B, deciding to operate in an isolated town. Suppose a $30 fee is required to enter the market. If firm A chooses its strategy first, then

Deterring entry might require a firm to

If there are low barriers to entry, a monopolist

In a Stackelberg oligopoly

A holdup problem occurs

Behavioral game theory assumes

Which of the following is a dynamic game?

Which of the following is a way to deter entry?

If firms have different costs and market demand only supports the quantity the incumbent produces, then the incumbent's threat to use limit pricing

In the ultimatum game, one reason players don't choose the rational offer is

An example of a game in which a leader moves first, and then the other rivals follow is a ________ game.

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 13: Strategies Over Time

A specific investment

The Cournot and Stackelberg models are similar, EXCEPT Cournot ________ and Stackelberg ________.

A player that starts at the end of the game and progresses to the first move to determine best responses

When there's uncertainty as to the length of a game,

A dynamic game is a game

If Intel moves first and makes a large investment in a chip fabrication plant in Bolivia in exchange for tax credits, Intel has made ________ and Bolivia ________.

An incumbent firm uses limit pricing

With regard to preventing entry, if identical firms act simultaneously,

Designing your products with proprietary technology, is a way to

-The above figure shows the payoff to two gasoline stations, A and B, deciding to operate in an isolated town. Suppose a $30 fee is required to enter the market. If firm A chooses its strategy first, then

Deterring entry might require a firm to

If there are low barriers to entry, a monopolist

In a Stackelberg oligopoly

A holdup problem occurs

Behavioral game theory assumes

Which of the following is a dynamic game?

Which of the following is a way to deter entry?

If firms have different costs and market demand only supports the quantity the incumbent produces, then the incumbent's threat to use limit pricing

In the ultimatum game, one reason players don't choose the rational offer is

An example of a game in which a leader moves first, and then the other rivals follow is a ________ game.

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

The Cournot and Stackelberg models are similar, EXCEPT Cournot and Stackelberg .

If Intel moves first and makes a large investment in a chip fabrication plant in Bolivia in exchange for tax credits, Intel has made and Bolivia .