Economics Chapter 14 Multiple Choice Reference Ref 149 Table Two

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109. Multiple Choice: (Table: Demand for Crude Oil) Look a...

Question (Table: Demand for Crude Oil) Look at the table Demand for Crude Oil. Assume

that the crude oil industry is a duopoly and the marginal cost of producing crude oil

equals zero. Suppose that the two firms are maximizing industry profit and splitting

the profit evenly. If both firms engage in noncooperative behavior, the industry

output will be _______ barrels, and the price of crude oil will be_______.

110. Multiple Choice: (Table: Demand for Crude Oil) Look a…

Question (Table: Demand for Crude Oil) Look at the table Demand for Crude Oil. Assume

that the crude oil industry is a duopoly and the marginal cost of producing crude oil

equals zero. Suppose that the two firms are maximizing industry profit and splitting

the profit evenly. If the industry is operating in perfect competition, the industry

output will be _______ barrels, and the price of crude oil will be_______.

111. Multiple Choice: Game theory is commonly used to expla…

Question Game theory is commonly used to explain behavior in oligopolies, because

oligopolies are characterized by:

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112. Multiple Choice: An analytical approach through which ...

Question An analytical approach through which strategic choices can be assessed is called:

113. Multiple Choice: An analytical framework used in the a...

Question An analytical framework used in the analysis of strategic choices is:

114. Multiple Choice: The study of behavior in situations o...

Question The study of behavior in situations of interdependence is known as:

115. Multiple Choice: The study of behavior in situations o...

Question The study of behavior in situations of interdependence is called:

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116. Multiple Choice: In the classic prisoners‘ dilemma wit...

Question In the classic prisoners‘ dilemma with two accomplices in crime, the dominant

strategy for each individual is to:

117. Multiple Choice: In the classic prisoners‘ dilemma wit...

Question In the classic prisoners‘ dilemma with two accomplices in crime, the Nash

equilibrium is for:

118. Multiple Choice: Gary‘s Gas and Frank‘s Fuel are the o...

Question Gary‘s Gas and Frank‘s Fuel are the only two providers of gasoline in their town.

Gary and Frank decide to form a cartel. Later, Gary summarizes his pricing

strategy as, “I‘ll cheat on the cartel because regardless of what Frank does,

cheating gives me the best payoff.” This is an example of:

119. Multiple Choice: An action is a dominant strategy when...

Question An action is a dominant strategy when it is a player’s best action:

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120. Multiple Choice: Figure: Payoff Matrix I for Blue Spri…

Question Figure: Payoff Matrix I for Blue Spring and Purple Rain

Reference: Ref 14-5

(Figure: Payoff Matrix I for Blue Spring and Purple Rain) The figure Payoff Matrix I

for Blue Spring and Purple Rain refers to two producers of bottled water. Each has

two strategies available to it: a high price and a low price. The dominant strategy

for Purple Rain is to:

121. Multiple Choice: Figure: Payoff Matrix for Ajinomoto a...

Question

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Figure: Payoff Matrix for Ajinomoto and ADM

Reference: Ref 14-6

(Figure: Payoff Matrix for Ajinomoto and ADM) Given the payoff matrix in the figure

Payoff Matrix for Ajinomoto and ADM, the optimal combination for maximum

combined profit occurs when:

122. Multiple Choice: Figure: Payoff Matrix for Ajinomoto a...

Question Figure: Payoff Matrix for Ajinomoto and ADM

Reference: Ref 14-6

(Figure: Payoff Matrix for Ajinomoto and ADM) Given the payoff matrix in the figure

Payoff Matrix for Ajinomoto and ADM, the Nash equilibrium combination occurs

when:

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123. Multiple Choice: Figure: Prisoners’ Dilemma for Thelma…

Question Figure: Prisoners‘ Dilemma for Thelma and Louise

Reference: Ref 14-7

(Figure: Prisoners‘ Dilemma for Thelma and Louise) Look at the Figure Prisoners’

Dilemma for Thelma and Louise. Thelma and Louise are arrested and put in jail for

murder. Given the payoff matrix in the figure, the optimal behavior for Thelma and

Louise is for:

124. Multiple Choice: Figure: Prisoners’ Dilemma for Thelma…

Question

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Figure: Prisoners‘ Dilemma for Thelma and Louise

Reference: Ref 14-7

(Figure: Prisoners‘ Dilemma for Thelma and Louise) Look at the Figure Prisoners’

Dilemma for Thelma and Louise. Thelma and Louise are arrested and put in jail for

murder. Given the payoff matrix in the figure, the Nash equilibrium behavior for

Thelma and Louise is for:

125. Multiple Choice: Figure: Payoff Matrix for the United ...

Question Figure: Payoff Matrix for the United States and the European Union

Reference: Ref 14-8

(Figure: Payoff Matrix for the United States and the European Union) Look at the

figure Payoff Matrix for the United States and the European Union. Suppose that

the United States and the European Union both produce corn, and each region can

make more profit if output is limited and the price of corn is high. If either region

increases its output of corn, the profits of both are affected as shown in the payoff

matrix. The optimal combination is for:

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126. Multiple Choice: Figure: Payoff Matrix for the United ...

Question Figure: Payoff Matrix for the United States and the European Union

Reference: Ref 14-8

(Figure: Payoff Matrix for the United States and the European Union) Look at the

figure Payoff Matrix for the United States and the European Union. Suppose that

the United States and the European Union both produce corn, and each region can

make more profit if output is limited and the price of corn is high. If either regions

increase their output of corn, the profits of both are affected as shown in the payoff

matrix. The Nash equilibrium combination is for:

127. Multiple Choice: The outcome of a strategic choice is …

Question The outcome of a strategic choice is called a:

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128. Multiple Choice: Suppose that each of two prisoners ha...

Question Suppose that each of two prisoners has the independent choice of confessing to a

crime or not confessing to a crime they were both alleged to commit. If neither

confesses, they spend 2 years in jail; if both confess, they spend 3 years in jail. If

one confesses and the other does not, the confessor gets off with 1 year in jail

while the other gets 6 years in jail. According to game theory, the likely strategy of

the prisoners is that:

129. Multiple Choice: Suppose that each of the only two fir...

Question Suppose that each of the only two firms in an industry has the independent choice

of advertising its product or not advertising. If neither advertises, each gets $10

million in profit; if both advertise, their profits will be $5 million each; and if one

advertises while the other does not, the advertiser gets profit of $15 million and the

other gets profit of $2 million. According to game theory, the Nash equilibrium is:

130. Multiple Choice: Suppose that each of the only two fir...

Question

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Suppose that each of the only two firms in an industry has the independent choice

of advertising its product or not advertising. If neither advertises, each gets $10

million in profit; if both advertise, their profits will be $5 million each; and if one

advertises while the other does not, the advertiser gets profit of $15 million and the

other gets profit of $2 million. According to game theory, if the firms could collude

to maximize profit:

131. Multiple Choice: A strategy that is the same regardles...

Question A strategy that is the same regardless of the action of the other player in a game is

said to be a:

132. Multiple Choice: A dominant strategy equilibrium exist...

Question A dominant strategy equilibrium exists in a game when:

133. Multiple Choice: Reference: Ref 14-9 (Table: Two Riva…

Question

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Reference: Ref 14-9

(Table: Two Rival Gas Stations) Look at the table Two Rival Gas Stations. Swifty

Gas and Speedy Gas are the only two gas stations in a small town. Each firm can

set either a high price or a low price, and customers view these two firms as nearly

perfect substitutes. The table shows the payoff matrix of daily profits that each firm

would receive from its pricing decision, given the pricing decision of its rival. Profits

in each cell of the payoff matrix are given as (Swifty, Speedy). If each firm sets the

price independently, the Nash equilibrium outcome will be:

134. Multiple Choice: Reference: Ref 14-9 (Table: Two Riva…

Question

Reference: Ref 14-9

(Table: Two Rival Gas Stations) Look at the table Two Rival Gas Stations. Swifty

Gas and Speedy Gas are the only two gas stations in a small town. Each firm can

set either a high price or a low price, and customers view these two firms as nearly

perfect substitutes. The table shows the payoff matrix of daily profits that each firm

would receive from its pricing decision, given the pricing decision of its rival. Profits

in each cell of the payoff matrix are given as (Swifty, Speedy). Which of the

following choices describes a dominant strategy?

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135. Multiple Choice: Suppose that each of the only two fir...

Question Suppose that each of the only two firms in an industry has the independent choice

of advertising its product or not advertising. If neither advertises, each gets $20

million in profit; if both advertise, their profits will be $10 million each; and if one

advertises while the other does not, the advertiser gets $25 million profit while the

other gets $4 million profit. According to game theory, the likely strategy by the

firms is:

136. Multiple Choice: Suppose that each of two prisoners ha...

Question Suppose that each of two prisoners has the independent choice of confessing to a

crime or not confessing to a crime they were alleged to jointly commit. They

cannot communicate with each other. If neither confesses, they spend 4 years in

jail; if both confess, they spend 6 years in jail; and if one confesses while the other

does not, the confessor gets off with 2 years in jail while the other gets 10 years in

jail. According to game theory, the likely strategy by the prisoners is:

137. Multiple Choice: A player’s best action (regardless of…

Question A player‘s best action (regardless of the action taken by the other player in a

game) is called a:

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138. Multiple Choice: A dominant strategy equilibrium exist...

Question A dominant strategy equilibrium exists in a game when:

139. Multiple Choice: Gary‘s Gas and Frank‘s Fuel are the o...

Question Gary‘s Gas and Frank‘s Fuel are the only two providers of gasoline in their small

town. Gary summarizes his pricing strategy as, “I‘ll do to Frank what Frank did to

me last time.” This is an example of:

140. Multiple Choice: If rival solar roof panels in Reno li...

Question If rival solar roof panels in Reno limit production and ________ prices in a way that

increases their profits without meeting with one another in a formal way, this is

known as ________ collusion.

141. Multiple Choice: Tacit collusion is difficult to achie…

Question Tacit collusion is difficult to achieve in practice:

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142. Multiple Choice: When a firm responds to a rival’s che...

Question When a firm responds to a rival’s cheating by cheating and to a rival’s cooperation

by cooperating, that firm is practicing a:

143. Multiple Choice: Unwritten or unspoken understandings ...

Question Unwritten or unspoken understandings through which firms collude to restrict

competition are called:

144. Multiple Choice: Which of the following is true?

Question Which of the following is true?

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145. Multiple Choice: An unwritten, unspoken agreement thro…

Question An unwritten, unspoken agreement through which firms limit competition among

themselves is called:

146. Multiple Choice: When firms in a particular industry i...

Question When firms in a particular industry informally agree to charge the same price as

the largest firm in that industry, it is called:

147. Multiple Choice: OPEC is:

Question OPEC is:

148. Multiple Choice: A well-known example of an internatio...

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Question A well-known example of an international cartel is:

149. Multiple Choice: Tacit collusion in an industry is lim…

Question Tacit collusion in an industry is limited by which of the following factors?

150. Multiple Choice: Which of the following does not descr…

Question Which of the following does not describe OPEC?

151. Multiple Choice: OPEC is a(n) ________that includes __...

Question OPEC is a(n) ________that includes ________.

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152. Multiple Choice: ________ is the unwritten or unspoken...

Question ________ is the unwritten or unspoken agreement through which firms limit

________.

153. Multiple Choice: Which of the following is a form of s…

Question Which of the following is a form of strategic behavior defined as behavior intended

to influence the future actions of other players?

154. Multiple Choice: Figure: Payoff Matrix for Jake and Zo...

Question

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Figure: Payoff Matrix for Jake and Zoe

Reference: Ref 14-10

(Figure: Payoff Matrix for Jake and Zoe) Look at the figure Payoff Matrix for Jake

and Zoe. Jake and Zoe are the only producers of slushies in their tourist town.

Each week, each decides whether to price high or price low for the following week.

The figure shows the profit per week earned by their two firms. What is the Nash

equilibrium for Jake and Zoe?

155. Multiple Choice: Figure: Payoff Matrix for Jake and Zo...

Question

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Figure: Payoff Matrix for Jake and Zoe

Reference: Ref 14-10

(Figure: Payoff Matrix for Jake and Zoe) Look at the figure Payoff Matrix for Jake

and Zoe. Jake and Zoe are the only producers of slushies in their tourist town.

Every week, each decides whether to price high or price low for the following week.

The figure shows the profit per week earned by their two firms. Suppose the firms

each decide to price high initially and adopt a tit-for-tat strategy for the following

weeks. After a few weeks, how much profit would each firm make per week?

156. Multiple Choice: Figure: Payoff Matrix II for Blue Spr…

Question Figure: Payoff Matrix II for Blue Spring and Purple Rain

Reference: Ref 14-11

(Figure: Payoff Matrix II for Blue Spring and Purple Rain) Payoff Matrix II for Blue

Spring and Purple Rain refers to two producers of bottled water. The Nash

equilibrium in the figure is reached when:

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157. Multiple Choice: Figure: Payoff Matrix II for Blue Spr…

Question Figure: Payoff Matrix II for Blue Spring and Purple Rain

Reference: Ref 14-11

(Figure: Payoff Matrix II for Blue Spring and Purple Rain) Payoff Matrix II for Blue

Spring and Purple Rain refers to two producers of bottled water. Each has two

strategies available to it: a high price and a low price. The dominant strategy for

Purple Rain is to:

158. Multiple Choice: Figure: Payoff Matrix II for Blue Spr…

Question

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