final exam fall 2009 answer key

final exam fall 2009 answer key - FINAL EXAMINATION ECON...

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FINAL EXAMINATION ECON 200 FALL, 2009 NAME: _________________________________________________________________ STUDENT ID NUMBER: __________________________________________________ DISCUSSION SECTION NUMBER: _________________________________________ PLEASE CIRCLE YOUR TEACHING ASSISTANT’S NAME: Aran Canes Maria Prada Ron Chan Megha Pradhan Alan Finkelstein Shapiro Pat Sujarittanonta Kristian Lopez Orathai Sujitprapakorn Tim Moore José Torres SIGNATURE: __________________________________________________________ INSTRUCTIONS: 1. Write the color of your exam in the upper right-hand corner of your SCANTRON sheet: WHITE, BLUE, GREEN, or YELLOW. 2. Enter the number 123456 under “Special Codes” on the SCANTRON sheet. 3. Fill in your name (last name, then first name) at the top of the SCANTRON . Fill in your student ID number on the SCANTRON sheet. 4. There are 44 multiple choice questions and 4 problems with multiple parts. Please inform a proctor if you do not have all of the questions on your copy of the exam. The multiple choice questions are worth a total of 88 points and the problems are worth a total of 52 points. 5. Answer the multiple choice questions on the SCANTRON sheet. Answer the problems in the space below (please write on the back if you need more room). ***************************************************************** GRADING (TA’s use only): Problem 1 ______ Problem 2 ______ Problem 3 ______ Problem 4 ______ Total _______
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Problem 1 (13 points) There are two automobile companies, Red and Brown.  Each will develop either a new SUV or a new subcompact.  They will make  their decisions simultaneously.   If they both choose SUV or if they both choose subcompact, Red earns $10 and Brown earns $30.  If Red chooses SUV and Brown chooses subcompact , Red earns $40 and Brown earns $5.  If Red chooses subcompact and Brown  chooses SUV, Red earns $35 and Brown earns $15. (a) Present the payoff matrix for this game.  In your payoff matrix, let the rows be Red’s strategies and let the columns be Brown’s  strategies. (b) Define a dominant strategy.  Does Brown have a dominant strategy?  Does Red have a dominant strategy? Explain your answers in  2-3 sentences. (c) Define a Nash equilibrium.  How many Nash equilibria does this game have?  Explain your answer in 2-3 sentences. (a)  (b) A dominant strategy is a strategy that is the best strategy for a player regardless of the strategies chosen by the other players.  Neither Brown nor Red have a dominant strategy.  Red, for example, should choose Subcompact if Brown chooses SUV but should  choose SUV if Brown chooses Subcompact. (c) In A Nash equilibrium, Player A chooses the best possible strategy given Player B’s choice and Player B chooses the best possible 
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This note was uploaded on 09/25/2011 for the course BMGT 220 taught by Professor Bulmash during the Spring '08 term at Maryland.

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final exam fall 2009 answer key - FINAL EXAMINATION ECON...

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