test3_ECO2003F_2009 - ECO2003F: INTERMEDIATE MICROECONOMICS...

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ECO2003F: INTERMEDIATE MICROECONOMICS TEST 3 Shakill Hassan & Lawrence Edwards 14 May 2009 Time allowed: 75 minutes z This is a closed-book multiple choice test. z This test is comprised of 15 multiple choice questions and has 7 pages including the cover page. z Questions that are correctly answered will earn you 4 marks, while each incorrectly answered question attracts a penalty of 1 negative mark. z Read through and answer the questions you find easier first. z Stay calm. z Good luck! 1
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Q1. The strategic form or normal form representation of a game comprises: i. A list of participants (the players) ii. A list of strategies for each player iii. A list of payoffs for each player, associated with each strategy profile (i.e. each combination of strategies of each player) a) Only (i) is correct b) Only (i) and (ii) are correct c) Only (i) and (iii) are correct d) (i), (ii) and (iii) are correct e) Only (ii) and (iii) are correct Q2. The prediction that a player (say, player 1 in a two-player game) will not choose a strictly dominated strategy requires: a) Only that player 1 is rational b) That both players are rational c) That player 1 is irrational d) That both players are rational and each players knows the other is rational e) That both players are rational; each players knows the other is rational; and each player knows that the other knows that he/she is rational Q3. Nash equilibrium as prediction of choices in a two-player game requires: a) Only that player 1 is rational b) Only that both players are rational c) That one of the players is irrational d) Only that both players are rational and each players knows the other is rational e) That both players are rational; each players knows the other is rational; and each player knows that the other knows that he/she is rational, etc – i.e. rationality and common knowledge of rationality 2
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Q4. (Hint: be careful) In the following two-player game, assuming only that both
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This note was uploaded on 05/23/2011 for the course ECON 203 taught by Professor Jules during the Spring '11 term at University of Cape Town.

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test3_ECO2003F_2009 - ECO2003F: INTERMEDIATE MICROECONOMICS...

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