02 Jun Question 1. In the following game with simultaneous moves, Firm
Question
1. In the following game with simultaneous moves, Firm 1 and Firm 2 must decide whether to advertise (Y) or not advertise (N):
The NASH equilibrium of this game is
(Y, Y)
(Y, N)
(N, Y)
(N, N)
1. A strategy in which a player randomizes over several available actions is called
A dominant strategy
A secure strategy
A mixed strategy
A trigger strategy
1. Consider the following game with sequential moves:
In the subgame perfect NASH equilibrium of this game,
Firm 1 chooses A and Firm 2 chooses X
Firm 1 chooses A and Firm 2 chooses Y
Firm 1 chooses B and Firm 2 chooses X
Firm 1 chooses B and Firm 2 chooses Y
1. There are N = 3 businesses in an oligopoly industry. The businesses produce identical products and have the same marginal cost of MC = 100 dollars. If the market elasticity of demand is EM = ?2, the equilibrium price in the industry is
100 dollars
120 dollars
130 dollars
150 dollars
1. A monopoly has the total cost function C(q) = 150 + 10q and serves two types of customers, Type A and Type B. If the price elasticity of demand for Type A customers is EA = ?3 and the price elasticity of demand for Type B customers is EB = ?2, the prices which maximize the profit of the monopoly are
PA = 15 and PB = 20
PA = 20 and PB = 15
PA = 20 and PB = 30
PA = 30 and PB = 20
1. Assume your typical customer has the demand function q = 20 ? p and your marginal cost is MC = 10 dollars, as illustrated in the graph. Then, the optimal two-part pricing strategy is
Fixed fee = 25 dollars and Per-unit price = 15 dollars
Fixed fee = 25 dollars and Per-unit price = 10 dollars
Fixed fee = 50 dollars and Per-unit price = 15 dollars
Fixed fee = 50 dollars and Per-unit price = 10 dollars
1. The pricing strategy in which multiple units of a product are sold as a package is called
Two-part pricing
Peak-load pricing
Transfer pricing
Block pricing
1. An assembly-line worker is more likely to exert less effort and produce fewer units when he is paid by the hour than when he is paid based on the number of units produced. This is an illustration of
Adverse selection
Moral hazard
Signaling
Screening
1. A business is considering an investment with uncertain outcomes. In particular, the return from the investment will be 100,000 dollars with 20% probability, 50,000 dollars with 30% probability, and 20,000 dollars with 50% probability. The expected return from the investment is
20,000 dollars
35,000 dollars
45,000 dollars
50,000 dollars
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