Exam 4 - October 15, 2004 Principles of Microeconomics Test...

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Unformatted text preview: October 15, 2004 Principles of Microeconomics Test Form B Name glimmer Aicllv’illhr“! GTID (“3 9 ll Exam 4 Mark your GT ID number and the test form on your scantron. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The marginal product of labor is 1) C A) the change in total cost from a one—unit increase in the quantity of labor employed. B) the change in the quantity of labor employed. C) the change in total output from a one—unit increase in the quantity of labor employed. D) the change in the quantity of labor employed from a one—unit increase in total output. Scenario 3 Consider a two—person dynamic game that is played as follows: There is a pot of money. Initially, the pot has $1 in it. Player 1 moves first. He can either stop the game and take all the money in the pot ($1.00) or let the game go to round two. In round two, a dollar is added to the pot and player 2 moves. She can either stop the game and take all the money in the pot ($2) or let the game go on to round three. And so on. Player 1 movest in odd~numbered rounds, Player 2 moves in even—numbered rounds, and at the beginning of every round, a dollar is added to the pot; in round N there are $N in the pot. The game ends when a player stops it or when round 10 is reached. If the game reaches round 10, player 2 gets all the money in the pot ($10) and the game ends. ' 2) Refer to Scenario 3. What is the subgame perfect equilibrium strategies in this game? 2) C A) Player 2 lets the game go on until it reaches round 10. B) Player 1 lets the game go on until it reaches round 9 and stops the game in round 9. C) At every decision node, players stops the game and take money. laxrnv 1 affine 111) A C; A u u x. D)” "per a, u. mu . p ame and in round 2 player 2 Sit) n “11., u. bunt 3) Refer to Scenairo 3. What is the subgame perfect equilibrium outcome? 0.) C, A) Player 1 stops the game and takes money in round 1. B) Player 2 stops the game and takes money in round 2. ame and takes m g D) Player 2 stops the game and takes money in rounle. 4) Total cost is the sum of fixed costs and 4) A) implicit costs. 13) variable costs. i C) explrcrt costs. D acconntm JLCIIdI’lUl “l fii‘ ti Consider the following game depicting the process of standard settihg‘in'high‘ldedfihition television (HDTV). The United States and Japan must simultaneously decide wether to invest a high (High) or a low (Low) value into HDTV research. USA prefers (Low, Low) most, (High, Low) second, (Low, High) third, and (High, High) least, where the first action in parenthesis is the action for USA and the second action is for Japan. Japan prefers (Low, High) most, (Low, Low) second, (High, Low) third, and (High, High) least, where the first action in parenthesis. is the action for USA and the second action is forJapan. / 5) Refer to Scenario 1. What is the Nash equilibrium of this static game of complete information? 5) ,/.\J A) (Low, High) B) (High, Low) C) (High, High) D) (Low, Low) 6) Refer to Scenario 1. Suppose now that the United States has the option of committing to a strategy 6) 0 ' before Japanfls decision is reached. What would HAPPle in the subgame perfect equilibrium? H. b L/ELVR USA invests a low value and Japan invests a high value . My 3" i .. runAAL- - L1AL _,_,I , 7 apart uivtISLS at 111511 value L .3 LL L N d} D USA invests a high value and Japan invests a low value / I a I _ \ 1%,?» (2H) viz) L‘t‘? / A) USA invests a low value and Japan invests a low value ‘ : L "a .. 51A; anCStS a hlgll Va A 7) Refer to Scenario 1. We still suppose that the United States has the option of committing to a 7) A“ ,3; j\ strategy before Ja panUs decision is reached. Which statement would be true about the subgame perfect equilibrium of this game? I A) Japan loses from USA’s commitment. B) USA gains from her commitment. C) USA loses from her commitment. D) Japan gains from USA'S commitment Cost schedule Total variable ’ Labor Output Total fixed cost cost (workers) (units per day) (dollars) (donars) 0 I 0 ' 20 I 0 I l 4 20 25 9 20 50 3 13 20 75 l—TfilT‘l 20 l 100 l s 18 20 8) in the above table, the total variable cost of producing 16 units of output is 8) A) $100. “) $60. C) $120. D) $20. f) 9) Using the data in the above table, the average total cost of producing 16 units per day is 9) A) $6.25. B) $7.50. C) $1.25. D) $7.00 lefe information, a suv 10) in a dynamic game of comp.“ game periec A) iterated elimination of dominating strategies B) iterated elimination of dominated strategies C) forward induction D) backward induction 11) A firm's marginal cost is the increase in its total cost divided by the increase in its 11) A) average cost. B) quantity of labor. C) output. D) average revenue. i Mn ‘2 m xx « reassess M O r. ‘E NA \1: \R O r Costs per unit (dollars per unit) 12 r .- \ /'a' 8 ( ’ 5 g l 5, 3 > t , 4 [if c D l «L I L." O 20 40 60 80 Quantity (units per day) j 12) In the above figure, the marginal cost curve is curve 12) A) A B) B C) C D) D 13) In the above figure, the average fixed cost curve is curve 13) 2“ A) A. B) B, C) C. D) D. Scenario 4 Suppose a kidnapper abducts a hostage and then discovers that she cannot get paid. The kidnapper has tw0 choices. They can either kill or release the hostage. 1f the kidnapper kills the hostage, she receives a payoff of —3 and the hostage receives a payoff of negative infinity. If the hostage is released, and refrains from identifying the kidnapper, the hostage gets a payoff of 3 and the kidnapper gets a payoff of 5. But if the hostage does identify the kidnapper, he gets a payoff of 5, leaving the kidnapper with a payoff of —5. 14) Refer to Scenario 4. What is the subgame perfect equilibrium of this game? 14) 2 A) (Kill, Refrain) B) (Kill, Identify) C) (Release, Refrain) D) (Release, Identify) 15) Which of the following is NOT an element of the game tree? 15) g A) decision node B) root C) terminal node D) branch 16) As output increases, total cost ,total fixed cost ,and total variable cost . 16) 2 A) increases; increases; does not change B) does not change; increases; increases C) increases; increases; increases D) increases; does not change; increases 17) Which statement would NOT be true? 17) l \ lnora nan lac mu Hula cuknamo novforf ornnlnqria 1 1/ LLILLL bull u» ILIULLLJJJL uuubuuu. yblval. VBIUAIAI/thlv B) The subgame perfect equilibrium does not solve the Prisoner's Dilemma. “// C) The subgame perfect equilibrium is always a Nash equilibrium. D) We can find the subgame perfect equilibrium by iteratively eliminating dominated strategies. I _ _ l A i - , i _ 1 Output l total cost “Drag? Marginal cost (units) (dollars) vagfillfrgslt (dollars) 14 380 -— 18) The above (incomplete) table provides information about the relationships between output and 18) various cost measures. The total fixed cost (TFC) for the firm is A) $10. B) $45. C) zero. D) None of the above answers is correct. 19) The above (incomplete) table provides information about the relationships between output and 19) C various cost measures. The total cost (TC) of producing 9 units of output is A) $190. 3) $20. C) $180. D) None of the above answers is correct. Scenario 2 Consider a game between an entrant and an incumbent. The entrant moves first and decide whether to ‘tay out or enter the market. If the entrant decrdes to stay out, the game ends and the entrant g a the entrant enters the market, th incumbent decides whether to fight or ets $1 million and the incumbent Fommodate. If the incumben + . entrant +kn;nr~1‘mk:1nlr manta m1 mill;nfi anr“ + a on+ranf nrof‘c‘ Q”) mHltrmc IF 111);nn11m mu fink» kn}ln Ihr‘11r ‘1: £2 m‘lnnnc an me .mmuvcms gem in . 1. mm m- mum” bug w. r. we “mauve... “gins, WU. me.“ We w the net cost of ighting. 20) Refer to Scenario 2. Which of the followings would NOT be true in this game? 20) A A) The entrant gets $1 millions in the subgame perfect equilibrium. R) The incumbent accommodates the entrant if it enters the market. C) In Nash equilibrum, the entrant stays out, given that the incumbent is ready to fight. D) Both players avoid fighting by all means. G /T (M A A K, \ r g 7‘ I T W 7 . a \ v < i 4 c I, I ...
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Exam 4 - October 15, 2004 Principles of Microeconomics Test...

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