Filters
Question type
Study Flashcards

Three firms join forces and form a cartel.The market price set by the cartel will be equivalent to the price set by a


A) monopolist.
B) monopolistically-competitive firm.
C) perfectly-competitive firm.
D) duopolist.
E) perfect price-discriminating monopolist.

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

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. -Refer to the decision tree above.Suppose Dean indicates to Matthew that he will always select the upper branch at either Y or Z.One would classify this statement as a A) credible threat. B) promise that is not credible. C) threat that is not credible. D) credible promise. E) commitment device. 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. -Refer to the decision tree above.Suppose Dean indicates to Matthew that he will always select the upper branch at either Y or Z.One would classify this statement as a


A) credible threat.
B) promise that is not credible.
C) threat that is not credible.
D) credible promise.
E) commitment device.

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

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. -Which of the following is NOT true of a Nash equilibrium in a game involving players A and B? A) Given the strategies of B,player A has chosen the highest payoff strategy. B) Neither player A nor player B wants to choose a different strategy. C) Both players would not wish to change their choices. D) Both players must have dominant strategies. E) Given the strategies of A,player B has chosen the highest payoff strategy. -Which of the following is NOT true of a Nash equilibrium in a game involving players A and B?


A) Given the strategies of B,player A has chosen the highest payoff strategy.
B) Neither player A nor player B wants to choose a different strategy.
C) Both players would not wish to change their choices.
D) Both players must have dominant strategies.
E) Given the strategies of A,player B has chosen the highest payoff strategy.

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

Correct Answer

verifed

verified

The table below shows the payoff matrix for players A and B to strategies X and Z. The table below shows the payoff matrix for players A and B to strategies X and Z. -Refer to the payoff matrix above.Player A finds that strategy X is __________ and player B finds that strategy X is __________. A) dominant;dominated B) dominated;dominant C) dominant;dominant D) dominated;dominated E) dominated;neither dominant nor dominated -Refer to the payoff matrix above.Player A finds that strategy X is __________ and player B finds that strategy X is __________.


A) dominant;dominated
B) dominated;dominant
C) dominant;dominant
D) dominated;dominated
E) dominated;neither dominant nor dominated

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

Correct Answer

verifed

verified

The payoff matrix below shows the extra profit firms X and Z will earn from two different strategies,A and B. The payoff matrix below shows the extra profit firms X and Z will earn from two different strategies,A and B. -Refer to the payoff matrix above.How much would firm Z have to pay firm X to get it to choose strategy B? A) $0. B) $100. C) $200. D) $300. E) $400. -Refer to the payoff matrix above.How much would firm Z have to pay firm X to get it to choose strategy B?


A) $0.
B) $100.
C) $200.
D) $300.
E) $400.

F) B) and D)
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.The reason the game is a prisoner's dilemma is that A) both firms choose the same strategy. B) both firms have a dominant strategy. C) both firms find that their dominant strategies produce a better outcome than their dominated strategies. D) both firms find that their dominated strategies produce a better outcome than their dominant strategies. E) neither firm has a dominant strategy. -Refer to the payoff matrix above.The reason the game is a prisoner's dilemma is that


A) both firms choose the same strategy.
B) both firms have a dominant strategy.
C) both firms find that their dominant strategies produce a better outcome than their dominated strategies.
D) both firms find that their dominated strategies produce a better outcome than their dominant strategies.
E) neither firm has a dominant strategy.

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

Correct Answer

verifed

verified

The essential characteristic of a credible threat is that


A) there must be a very serious penalty.
B) the threatener may or may not carry out the threat.
C) the threatener and the threatenee must know each other well.
D) it is in the threatener's interest to act on the threat.
E) it is legally enforceable.

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

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 all citizens have been strongly conditioned to behave honestly,such that Dean would be willing to pay 600,000 to avoid the feelings of guilt that would accompany dishonest behaviour.What is the likely outcome of the game? A) 1000 for Matthew and 1000 for Dean. B) 500 for Matthew and 1500 for Dean. C) 1.5 million for Matthew and 1 million for Dean. D) 400 for Matthew and 1.5 million for Dean. E) The game will not be played. 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 all citizens have been strongly conditioned to behave honestly,such that Dean would be willing to pay 600,000 to avoid the feelings of guilt that would accompany dishonest behaviour.What is the likely outcome of the game?


A) 1000 for Matthew and 1000 for Dean.
B) 500 for Matthew and 1500 for Dean.
C) 1.5 million for Matthew and 1 million for Dean.
D) 400 for Matthew and 1.5 million for Dean.
E) The game will not be played.

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

Correct Answer

verifed

verified

The market for bagels in Charlottetown,PEI contains two firms: BagelWorld (BW) and Bagels'R'Us (BRU) .The owners of the two firms decide to fix the price of bagels.The table shows the total revenue the firms will collect if they abide by the price-setting agreement or if they cheat on the agreement. The market for bagels in Charlottetown,PEI contains two firms: BagelWorld (BW) and Bagels'R'Us (BRU) .The owners of the two firms decide to fix the price of bagels.The table shows the total revenue the firms will collect if they abide by the price-setting agreement or if they cheat on the agreement. -Refer to the payoff matrix above.Suppose a new element was introduced into the agreement: if one firm cheats today,the other firm will cheat tomorrow but if one firm abides today,the other will abide tomorrow.This strategy pattern is known as A) the prisoner's dilemma B) cartel-like behavior C) tit-for-tat. D) mutual cooperation E) incredible promise. -Refer to the payoff matrix above.Suppose a new element was introduced into the agreement: if one firm cheats today,the other firm will cheat tomorrow but if one firm abides today,the other will abide tomorrow.This strategy pattern is known as


A) the prisoner's dilemma
B) cartel-like behavior
C) tit-for-tat.
D) mutual cooperation
E) incredible promise.

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

Correct Answer

verifed

verified

A major reason that firms form a cartel is to


A) reduce the elasticity of demand for the product.
B) enlarge the market share for each producer.
C) minimize the costs of production.
D) maximize joint profit.
E) increase competition.

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

Correct Answer

verifed

verified

The payoff matrix below shows the extra profit firms X and Z will earn from two different strategies,A and B. The payoff matrix below shows the extra profit firms X and Z will earn from two different strategies,A and B. -If firm A's competitor advertises to increase sales and the best action is also for firm A to advertise,then A) a Nash equilibrium results. B) a cartel equilibrium results. C) a cooperative equilibrium results. D) a non-cooperative equilibrium results. E) a duopoly equilibrium results. -If firm A's competitor advertises to increase sales and the best action is also for firm A to advertise,then


A) a Nash equilibrium results.
B) a cartel equilibrium results.
C) a cooperative equilibrium results.
D) a non-cooperative equilibrium results.
E) a duopoly equilibrium results.

F) B) and E)
G) None of the above

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. -Refer to the decision tree above.Suppose Dean promises Matthew that he will always select the upper branch at either Y or Z.Dean offers to sign a legally-binding contract that penalizes him if he fails to choose the upper branch at Y or Z.The penalty is $250.The outcome of the game is that A) Matthew picks Z and Dean pays the fine. B) Matthew picks Y and Dean does not pay the fine. C) Matthew picks Z and Dean does not pay the fine. D) Matthew picks Y and Dean pays the fine. E) Matthew picks Z and Dean selects the upper 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. -Refer to the decision tree above.Suppose Dean promises Matthew that he will always select the upper branch at either Y or Z.Dean offers to sign a legally-binding contract that penalizes him if he fails to choose the upper branch at Y or Z.The penalty is $250.The outcome of the game is that


A) Matthew picks Z and Dean pays the fine.
B) Matthew picks Y and Dean does not pay the fine.
C) Matthew picks Z and Dean does not pay the fine.
D) Matthew picks Y and Dean pays the fine.
E) Matthew picks Z and Dean selects the upper branch.

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

Correct Answer

verifed

verified

A cartel is


A) another name for pure monopoly.
B) a coalition of consumers.
C) a highly stable arrangement.
D) a coalition of firms that agree to restrict output in an effort to earn higher profit.
E) an agreement between countries to reduce trade.

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

Correct Answer

verifed

verified

The table below shows the payoff matrix for players A and B to strategies X and Z. The table below shows the payoff matrix for players A and B to strategies X and Z. -Refer to the payoff matrix above.This game has A) no Nash equilibrium. B) a Nash equilibrium because both players pick strategy X. C) a Nash equilibrium because A picks strategy Z and B picks strategy X. D) a Nash equilibrium because both players have made the best choice available to them. E) a Nash equilibrium if both players pick strategy Z. -Refer to the payoff matrix above.This game has


A) no Nash equilibrium.
B) a Nash equilibrium because both players pick strategy X.
C) a Nash equilibrium because A picks strategy Z and B picks strategy X.
D) a Nash equilibrium because both players have made the best choice available to them.
E) a Nash equilibrium if both players pick strategy Z.

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

Correct Answer

verifed

verified

-When an oligopolistic firm advertises its products,its demand curve shifts rightward because A) its products are now cheaper. B) other firms also advertise their products. C) customers may switch brands in favour of the advertised products. D) new customers who did not previously use the products may now purchase the advertised products. E) customers may switch brands in favour of the advertised products,and new customers who did not previously use the products may now purchase the advertised products. -When an oligopolistic firm advertises its products,its demand curve shifts rightward because


A) its products are now cheaper.
B) other firms also advertise their products.
C) customers may switch brands in favour of the advertised products.
D) new customers who did not previously use the products may now purchase the advertised products.
E) customers may switch brands in favour of the advertised products,and new customers who did not previously use the products may now purchase the advertised products.

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

Correct Answer

verifed

verified

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


A) a Nash equilibrium.
B) tit-for-tat.
C) a cartel.
D) an ultimatum bargaining game.
E) an incredible promise.

F) C) and D)
G) D) 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 X represents A) AMD choosing to price below cost. B) Intel choosing to price above cost. C) Intel choosing to price below cost. D) AMD choosing between above-and below-cost pricing. E) Intel choosing between above-and below-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 X represents


A) AMD choosing to price below cost.
B) Intel choosing to price above cost.
C) Intel choosing to price below cost.
D) AMD choosing between above-and below-cost pricing.
E) Intel choosing between above-and below-cost pricing.

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

Correct Answer

verifed

verified

The payoff matrix below shows the extra profit firms X and Z will earn from two different strategies,A and B. The payoff matrix below shows the extra profit firms X and Z will earn from two different strategies,A and B. -Refer to the payoff matrix above.Suppose all the payoffs to strategies A and B double for only firm X.The outcome of the game A) remains the same. B) reverses itself. C) is a prisoner's dilemma. D) suffers from a commitment problem. E) may or may not change. -Refer to the payoff matrix above.Suppose all the payoffs to strategies A and B double for only firm X.The outcome of the game


A) remains the same.
B) reverses itself.
C) is a prisoner's dilemma.
D) suffers from a commitment problem.
E) may or may not change.

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

Correct Answer

verifed

verified

Mary has just finished eating at an out-of-town restaurant she knows she will never visit again.The food and service were excellent.She leaves a 20% tip.Mary's behaviour is


A) a psychological solution to a commitment problem.
B) a material solution to a commitment problem.
C) consistent with narrowly-defined self-interest.
D) quite uncommon.
E) naïve.

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

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. -Refer to the decision tree above.The outcome of this game is A) Matthew and Dean both get $1000. B) Matthew gets $500 and Dean gets $1500. C) Matthew gets $1.5 million and Dean gets $1 million. D) Matthew gets $400 and Dean gets $1.5 million. E) unpredictable. 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. -Refer to the decision tree above.The outcome of this game is


A) Matthew and Dean both get $1000.
B) Matthew gets $500 and Dean gets $1500.
C) Matthew gets $1.5 million and Dean gets $1 million.
D) Matthew gets $400 and Dean gets $1.5 million.
E) unpredictable.

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

Correct Answer

verifed

verified

Showing 81 - 100 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