Econ_002_Exam___3_1_-1

Econ_002_Exam___3_1_-1 - Econ 002 Exam # 3 Student: _ 1....

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Econ 002 Exam # 3 Student: ___________________________________________________________________________ 1. The three elements of a game are A. the firm, the consumers and the profit B. the players, the strategies and the payoffs C. the model, the graph and the costs D. the costs, the revenue and the profit E. the industry, the firms and the demand 2. Game theory is not useful in understanding perfect competition because A. by assumption, the firms are so small as to be unable to influence price and thus are not interdependent. B. perfectly competitive firms are honest. C. the players can't be identified. D. the payoffs to their choices are unknown. E. their strategies can't be discerned. 3. The category of games in which playing the dominant strategies leads to a less desirable equilibrium than playing the dominated strategies is refer to as A. prisoner's dilemma. B. dominant strategies. C. Nash equilibrium. D. Tit-for-tat. E. ultimatum bargaining game. 4. The distinguishing feature of a cartel is A. two firms are involved. B. firms agree to restrict output to earn economic profit. C. inelastic consumer demand. D. a formal, written document. E. firms agree to restrict membership in the cartel. 1
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5. Cigarette manufacturers once relied heavily on TV advertising. According to the textbook, when the government banned TV ads, the cigarette manufacturers A. supported the ban due to their concern over health effects of smoking. B. felt their 1stamendment rights were being violated. C. were made worse off because the ban significantly reduced cigarette sales. D. benefited because their advertising prisoner's dilemma was solved. E. saw their profits fall. 6. The essential characteristic of a credible threat is A. that the threatener has a reputation for carrying out threats. B. that the threatener ignores the costs of carrying out the threat. C. that the threatener and the threatenee know each other well. D. that it is in the threatener's self interest to act on the threat. E. that it is legally enforceable. 7. A monopolistically competitive firm A. sells products that are perfect substitutes for its competitors' products, so must compete on the basis of location. B. sells products that are close substitutes for its competitors' products, so will locate as far away from its competitors as possible. C. sometimes distinguishes its output from that of its competitors by locating in a more convenient place. D. will be more successful the more similar its output is to its competitors' output. E. has a dominant strategy of waiting to introduce a new product after the other firms have introduced new products. 8. A commitment problem exists when A. players cannot make credible threats or promises. B. players cannot make threats.
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Econ_002_Exam___3_1_-1 - Econ 002 Exam # 3 Student: _ 1....

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