midterm 1 practice4 - ECON 398 Fall 2006 Midterm 1 Practice...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 398 Fall 2006 Midterm 1 Practice Exam 4 Professor Ozdenoren INSTRUCTIONS You have 80 minutes to complete the exam. There are 16 questions.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Elbonia and Sylvonia are two neighboring countries where Elbonia is much larger in size and it is more influential globally. Elbonia is increasingly becoming aware of prolific nuclear program activities in Sylvonia. Elbonia can either ignore such activities, negotiate with Sylvonia or go to direct war against Sylvonia. If Elbonia ignores growing nuclear activities in Sylvonia the payoff of (Elbonia, Sylvonia) is given by (50,250). If Elbonia decides to go through a negotiation process, then Sylvonia can either agree or disagree. If Sylvonia agrees the payoff is (210,150), but if it disagrees the payoffs are (150,180). If Elbonia decides to wage a war Sylvonia can either retaliate or not retaliate. If Sylvonia retaliates, Elbonia can employ more troops there which results in payoffs (200,120) or due to increasing defense cost may decide to carry on the war with the existing troops which results in payoffs (150,140). Even if Sylvonia does not retaliate Elbonia can employ more troops there to increase security resulting in payoffs (230,130) or it may just keep existing number of troops with payoffs (240,130). 1. How many strategies does Elbonia have? a) 4 b) 6 c) 8 d) 12 e) 16 2. The equilibrium outcome (payoff) of the game is
Image of page 2
3. The equilibrium strategy of Elbonia is, Suppose that countries A and B engage in large amounts of trade. When country A sets its tariffs to x percent and country B to y percent the payoff to country A from trade is 800 + 60x – xy – x 2 and the payoff to country B is 800 + 60y – xy – y 2 .
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern