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Econ2_Practice_2B

# Econ2_Practice_2B - page 1 of 6 Economics 2 Winter 2009...

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page 1 of 6 Economics 2 your name _______________________________ Winter 2009 your TA’s name __________________________ day and time of your discussion section ________ student id number _________________________ PRACTICE SECOND EXAM DIRECTIONS: No calculators, books, or notes of any kind are allowed. All papers and notebooks must remain closed and on the floor at all times throughout the exam, and students are not allowed to leave the examination room until finished. Answer all questions in the space provided with the exam. HINTS: Feel free to use either of the following formulas if you find them useful. Area of a triangle = (1/2) (base) (height) Area of a trapezoid = (1/2) (base1 + base2) (height) PART I: MULTIPLE CHOICE—circle the correct answer (4 points each, 76 points total) Questions 1 through 3 refer to an advertising game between Alice’s company and Bonnie’s company. Alice advertises Alice doesn’t advertise Bonnie advertises Alice gets 30 Alice gets 40 Bonnie gets 30 Bonnie gets 60 Alice gets 40 Alice gets 50 Bonnie doesn’t advertise Bonnie gets 20 Bonnie gets 50 1.) Which of the following statements is correct? a.) Alice has a dominant strategy and Bonnie has a dominant strategy b.) Alice has a dominant strategy but Bonnie does not have a dominant strategy c.) Alice does not have a dominant strategy but Bonnie does have a dominant strategy d.) Alice does not have a dominant strategy and Bonnie does not have a dominant strategy 2.) How would you characterize the Nash equilibrium for this game? 3.) How would you characterize this game?

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page 2 of 6 4.) Which of the following is the best characterization of tit-for-tat? 5.) In game theory, a threat by Player A is said to be credible if a.) the threatened action is within the power of Player A to carry out b.) the threatened action would be in the interests of Player A to carry out c.) the threatened action is exactly what Player B would want Player A to do d.) the threatened action by A is exactly the same action that Player B was planning to do himself
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Econ2_Practice_2B - page 1 of 6 Economics 2 Winter 2009...

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