This preview shows pages 1–4. Sign up to view the full content.
ECON 398 Fall 2006 Midterm 1
Practice Exam 2
Professor Ozdenoren
INSTRUCTIONS
You have 80 minutes to complete the exam. There are 16 questions.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document 1.
Notice that there is a variable
x
in the payoffs of the following game:
Carrie
R
L
Rhonda
U
3,4
2,3
D
1,3
x
,10
For what values of
x
is there
exactly one
pure strategy Nash equilibrium?
a)
for all x > 1
b) for all x < 2
c)
for all x > 2
d) for all x < 3
e)
for all x > 3
2.
Roland and Colin: part 1
Colin
R
L
Roland
U
$5, $1
$0, $0
D
$5.50,$1
$3, $3
If Roland and Colin play this game, how much should Colin expect to make?
a)
$0
b) $0.75
c)
$1
d) $2
e)
$3
3.
Roland and Colin: Part 2
In the game above, suppose that the following move is available to Roland before the
game begins: For the price of one dollar, he can have one of his actions U or D
publicly removed (committing himself to the other action).
What should he do and
why?
a)
Keep the dollar.
Removing an action does not help him at all.
b)
Keep the dollar.
Removing an action does help him, but not enough to justify
the cost.
c)
Pay 1 dollar and remove “U”.
Committing to playing D wins him more than
one dollar.
d)
Pay 1 dollar and remove “D”.
Committing to playing U wins him more than
one dollar.
e)
None of the above.
4.
Retro Sixties Free Love Competition in Ann Arbor: Part 1
Middle Earth (M) and Stairway to Heaven (S) are the only two stores in Ann Arbor
that sell lava lamps.
Suppose that these lamps cost $10 each to produce.
Now, from
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview. Sign up
to
access the rest of the document.
This note was uploaded on 04/14/2008 for the course ECON 398 taught by Professor Emre during the Fall '07 term at University of Michigan.
 Fall '07
 Emre

Click to edit the document details