Quiz 3B_Solved

Quiz 3B_Solved - BSc II-Sec A Microeconomics Spring 2011...

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Unformatted text preview: BSc II-Sec A Microeconomics Spring 2011 Quiz 3B Lahore School of Economics Microeconomics II BSc 2 Section B Quiz 3B Total Points: 60 Suggested Solutions Any queries can be emailed or discussed in class A market structure in which there is one large firm that has a major share of the market and many smaller firms supplying the remainder of the market is called: a. the Stackelberg Model. b. the kinked demand curve model. c. the dominant firm model. d. the Cournot model. e. the Bertrand model. Your economics professor has decided that your class will not be graded on a curve but on an absolute scale. Therefore, it is possible for every student in the class to get an "A." Your grade will not depend in any way on your classmates performance. Based on this information, you decide that you should study economics three hours each day, regardless of what your classmates do. In the language of game theory, your decision to study three hours each day is: a. a dominant strategy. b. a minimax strategy. c. a maximin strategy. d. a Prisoners dilemma. Scenario 2: - 1 - ABC Inc. Offer Rebate No Rebate XYZ Corp Offer Rebate 20, 10 30, 0 No Rebate 12, 16 20, 4 BSc II-Sec A Microeconomics Spring 2011 Quiz 3B Which of the following is true about the game in Scenario 2? a. ABC's dominant strategy is to offer a rebate. b. ABC's dominant strategy is not offer a rebate. c. XYZ's dominant strategy is to offer a rebate. d. XYZ's dominant strategy is not offer a rebate. e. Both ABC and XYZ have offer a rebate as a dominant strategy.- 2 - BSc II-Sec A Microeconomics Spring 2011 Quiz 3B Use the following statements to answer this question: I.If mixed strategies are allowed, every game has at least one Nash equilibrium. II.No strategy is optimal in the game of "matching pennies." a. Both I and II are true. b. I is true, and II is false. c. I is false, and II is true. d. Both I and II are false. Scenario 7: Consider the game below about funding and construction of a dam to protect a 1,000-person town. Contributions to the Dam Fund, once made, cannot be recovered, and all citizens must contribute $1000 to the dam in order for it to be built. The dam, if built, is worth $70,000 to each citizen.- 3 - BSc II-Sec A Microeconomics Spring 2011 Quiz 3B One Citizen Contribute to Dam Dont Contribute to Dam Other 999 Contribute to Dam $69,000, $69,000-$1,000, $0- 4 - BSc II-Sec A Microeconomics Spring 2011 Quiz 3B Citizens Dont Contribute to Dam $0, -$1,000 $0, $0- 5 - BSc II-Sec A Microeconomics Spring 2011 Quiz 3B In the game in Scenario 7, the strategy pair that pays...
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Quiz 3B_Solved - BSc II-Sec A Microeconomics Spring 2011...

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