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1) Answer the following questions based on the payoff matrix for a single-period,
two-firm game for firms, Capoc and Caroc. The numbers in the matrix indicate the
profit in billions of dollars for a national of regional strategy. The profit outcome cells
are A, B, C, and D.
(a)Which strategies are the dominate ones for Capoc and Caroc?
(b)What is the Nash Equilibrium?
(c)What will be the total amount of profits for both firms if both firms decide their
strategy simultaneously?
(d)If Capoc makes a credible threat that determines the strategy for Caroc, which
combination of strategies will be selected and what will be the total amount of profits
for both firms?
2) Assuming conventional supply and demand curves, changes in the determinants of
both supply and demand will generally:
A.alter both equilibrium price and quantity.
B.alter equilibrium quantity but not equilibrium price.
C.alter equilibrium price but not equilibrium quantity.
D.have no effect on equilibrium price or quantity.
3) When people retroactively believe that they had accurately foreseen past events, they
are illustrating the:
A.Confirmation bias
B.Framing effect
C.Hindsight bias
D.Self-serving bias
4) The law of increasing opportunity costs is reflected in a production possibilities
curve that is:
A.an upsloping straight line.
B.a downsloping straight line.
C.bowed out from the origin.
D.bowed in toward the origin.
5) The role of the entrepreneur in society is to:
A.Provide capital to the firm which the management combines with labor
B.Bring the factors of production together and take the risks of producing
C.Control the land upon which all production takes place to get the most rent
D.Regulate what products are considered safe to market
6) Which would be an example of innovation within an existing business firm?
A.The development of Post-it note pads by the 3M Corporation
B.The granting of a patent to a university researcher
C.The formation of the start-up firm Amgen
D.The merger of AOL and Time-Warner
7) The following cost data are for a firm in the short run:
What is the firm's average variable cost at an output of 5 units?
A.$30
B.$60
C.$120
D.$140
8) An example of a nonrenewable resource would be:
A.Forests
B.Oceans
C.Gold ore
D.Solar energy
9) The following data show the relationship between output, total costs, and total
revenue for a pure monopoly.
Within which of the following ranges of output will the firm earn maximum economic
profits?
A.50 to 60 units
B.60 to 70 units
C.70 to 80 units
D.80 to 90 units
10) Minority workers are underrepresented and have less access to certain high-paying
occupations. This illustrates:
A.human-capital discrimination.
B.the crowding model.
C.the taste-for-discrimination model.
D.statistical discrimination.
