Practice_exam_2A

Practice_exam_2A - page 1 of 6 Economics 2 Fall 2011 your...

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page 1 of 6 Economics 2 your name _______________________________ Fall 2011 your TA’s name __________________________ day and time of your discussion section ________ your student id number _____________________ Practice Exam 2a 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, 80 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 earns 5 Alice earns 10 Bonnie earns 20 Bonnie earns 10 Alice earns 15 Alice earns 20 Bonnie doesn’t advertise Bonnie earns 15 Bonnie earns 5 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? a.) Alice advertises and Bonnie advertises b.) Alice advertises and Bonnie doesn’t advertise c.) Alice doesn’t advertise and Bonnie advertises d.) Alice doesn’t advertise and Bonnie doesn’t advertise 3.) How would you characterize this game? a.) prisoner’s dilemma b.) ultimatum bargaining game c.) tit-for-tat d.) none of the above
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page 2 of 6 4.) Which of the following statements is the best characterization of a two-player game in which Player 1 has a dominant strategy but Player 2 does not? a.) Player 1 must follow her dominant strategy in a Nash equilibrium b.) Player 2 has no basis for knowing what Player 1 will do c.) There can not be a unique Nash equilibrium d.) Player 1 has a Nash equilibrium but Player 2 does not 5.) Emotions like guilt and sympathy a.) are irrelevant to economic decision-making b.) reduce the likelihood that a transaction will maximize total economic surplus c.) can solve commitment problems, increasing players' payoffs d.) can solve commitment problems, but generally reduce players' payoffs 6.) Consider the following version of the Ultimatum Bargaining Game.
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This note was uploaded on 03/02/2012 for the course ECON 2 taught by Professor Kim during the Fall '08 term at UCSD.

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Practice_exam_2A - page 1 of 6 Economics 2 Fall 2011 your...

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