Filters
Question type
Study Flashcards

What are the essential elements of a competitive situation (modeled as a game)?

Correct Answer

verifed

verified

Any competitive situation can be describ...

View Answer

A game tree diagram is used to represent:


A) a non-zero-sum game.
B) a Nash equilibrium.
C) a simultaneous game.
D) a dominant strategy equilibrium.
E) a sequential game.

F) C) and D)
G) None of the above

Correct Answer

verifed

verified

The following matrix gives the profits (in thousands of dollars) for Firm 1 and Firm 2 from high-price,medium-price,and low-price pricing strategies: Table 10-1 The following matrix gives the profits (in thousands of dollars) for Firm 1 and Firm 2 from high-price,medium-price,and low-price pricing strategies: Table 10-1 -Refer to Table 10-1.Identify Firm 2's dominant strategy. A) Firm 2's dominant strategy is the low-price strategy. B) Firm 2's dominant strategy is the high-price strategy. C) Firm 2 does not have a dominant strategy. D) Firm 2's dominant strategy could be high-price or medium-price depending on its bargaining power. E) Firm 2's dominant strategy is the medium-price strategy. -Refer to Table 10-1.Identify Firm 2's dominant strategy.


A) Firm 2's dominant strategy is the low-price strategy.
B) Firm 2's dominant strategy is the high-price strategy.
C) Firm 2 does not have a dominant strategy.
D) Firm 2's dominant strategy could be high-price or medium-price depending on its bargaining power.
E) Firm 2's dominant strategy is the medium-price strategy.

F) C) and D)
G) A) and C)

Correct Answer

verifed

verified

Which one of the following is not a feature of the tit-for-tat strategy?


A) A tit-for tat strategy delivers limited punishments for an opponent's defections.
B) A tit-for-tat strategy by both firms supports a cooperative high payoff equilibrium.
C) A defection by an opponent is punished with a perpetual defection to the low-payoff strategy.
D) The tit-for-tat strategy is such that neither firm has an incentive to be the first to defect.
E) The tit-for-tat strategy is a contingent strategy to resolve a prisoner's dilemma.

F) A) and B)
G) A) and C)

Correct Answer

verifed

verified

The following matrix gives the profits (in thousands of dollars) for Firm 1 and Firm 2 from high-price,medium-price,and low-price pricing strategies: Table 10-1 The following matrix gives the profits (in thousands of dollars) for Firm 1 and Firm 2 from high-price,medium-price,and low-price pricing strategies: Table 10-1 -Refer to Table 10-1.Identify the true statement. A) The players must use mixed strategies since the game does not have a pure-strategy equilibrium. B) The value of the game is indeterminate. C) The firm that gets to choose its pricing strategy first will maximize profits irrespective of the other firm's actions. D) The outcome of the game represents a dominant-strategy equilibrium. E) The optimal solution to the game can be obtained through backward induction. -Refer to Table 10-1.Identify the true statement.


A) The players must use mixed strategies since the game does not have a pure-strategy equilibrium.
B) The value of the game is indeterminate.
C) The firm that gets to choose its pricing strategy first will maximize profits irrespective of the other firm's actions.
D) The outcome of the game represents a dominant-strategy equilibrium.
E) The optimal solution to the game can be obtained through backward induction.

F) B) and D)
G) A) and B)

Correct Answer

verifed

verified

What is meant by a mixed strategy?


A) A mixed strategy refers to two or more pure strategies,each with fixed probabilities.
B) A mixed strategy is a course of action chosen by a player with certainty.
C) A mixed strategy is a player's best response to any strategy that the other player might pick.
D) A mixed strategy refers to the moves made by a player in a repeated game.
E) A mixed strategy refers to the moves made by players in a cooperative game.

F) A) and D)
G) A) and E)

Correct Answer

verifed

verified

Discuss the role of communication in a cooperative agreement.

Correct Answer

verifed

verified

In a two person zero-sum game,communicat...

View Answer

The payoff table below depicts price competition between two electronics stores.(Payoffs are weekly profits in thousands of dollars for each store. ) The payoff table below depicts price competition between two electronics stores.(Payoffs are weekly profits in thousands of dollars for each store. ) (a)Assuming they determine their strategies independently of one another,what are the stores' respective equilibrium strategies? Explain briefly. (a)Assuming they determine their strategies independently of one another,what are the stores' respective equilibrium strategies? Explain briefly.

Correct Answer

verifed

verified

If price matching is the rule,the stores...

View Answer

Predatory pricing is a practice of deliberately pricing at a loss in order to bankrupt a rival. (a)Is predatory pricing rational?

Correct Answer

verifed

verified

Predatory pricing is an antitrust offens...

View Answer

What is the first mover advantage? Why is it an important strategy? Give an example to illustrate your answer.

Correct Answer

verifed

verified

The first mover advantage lies in the fact that the first firm to commit to a strategy - enter a market,announce a price,or set quantity,for instance - gains an advantage by dictating or inducing rival firms' reactions.For instance,a firm might take the first move of announcing a major capacity increase,with the aim of forestalling entry or production increases by rivals (Entry by a new firm at a sufficient scale would depress the market price sufficiently to be unprofitable).Another example is a firm that takes a lead in technology development that rivals may be unable to profitably match.

Why is backward induction important in competitive strategy?

Correct Answer

verifed

verified

Backward induction is the practice of so...

View Answer

Define limit pricing.Under what conditions is it an optimal strategy?

Correct Answer

verifed

verified

Limit pricing occurs when a dominant fir...

View Answer

Why is communication an important factor in competitive situations?

Correct Answer

verifed

verified

Communication allows rivals to state intentions and permits coordination of decisions.Indeed,it permits binding decisions.In general,the more players' interests coincide,the more significant communication (or lack of it)becomes.In a pure common-interest game,the problem is completely one of communication.In a zero-sum game,communication cannot help because the parties' interests are completely opposed (there is nothing to communicate about).

Consider the following game: Two players must choose one of three options: rock,paper,or scissors.The winner is determined as follows: Paper slaps rock (and wins);rock crushes scissors (and wins);scissors cuts paper (and wins).If both players choose the same option,it results in a draw.Does the game have a dominant strategy? Does it have an optimal pure strategy?

Correct Answer

verifed

verified

As many will recognize quickly...

View Answer

List and explain the various forms of oligopolistic cooperation,which may benefit all firms,and lead to greater profitability.

Correct Answer

verifed

verified

Cooperative actions include (b...

View Answer

The payoff table shows the competition between a new entrant (Firm 1)and an incumbent firm (Firm 2).Determine each firm's equilibrium strategy. The payoff table shows the competition between a new entrant (Firm 1)and an incumbent firm (Firm 2).Determine each firm's equilibrium strategy.

Correct Answer

verifed

verified

Firm 1's equilibrium...

View Answer

Provide an example of a competitive situation where there is a second-mover advantage.

Correct Answer

verifed

verified

Suppose duopolists compete by setting prices and have identical demand and cost structures.Firm A sets its prices first,Firm B second.Clearly,Firm B has a potential second-mover advantage.It can always match Firm A's price and earn an equal profit,and it might well gain by selecting a different price and earning a greater profit for itself (and a greater profit than A).Another second-mover example occurs in a zero-sum game without a pure strategy equilibrium.The second firm can always optimize its payoff after it sees the actual strategy move of the first firm.

A key difference between a one-shot game and a repeated game is that:


A) the repeated game allows the player to use a mixed strategy.
B) in the repeated game,each player's objective is to get the highest possible payoff with the first move.
C) the repeated game gives the players opportunities for cooperation.
D) in a one-shot game,a player's reputation might be important in influencing the other's action.
E) in a repeated game,players usually take independent actions.

F) A) and B)
G) C) and D)

Correct Answer

verifed

verified

The following matrix gives the profits (in thousands of dollars) for Firm 1 and Firm 2 from high-price,medium-price,and low-price pricing strategies: Table 10-1 The following matrix gives the profits (in thousands of dollars) for Firm 1 and Firm 2 from high-price,medium-price,and low-price pricing strategies: Table 10-1 -What is the difference between a constant-sum game and a zero-sum game? A) In a constant-sum game,the players' payoffs are in complete conflict with each other unlike a zero-sum game. B) The equilibrium payoffs in a constant-sum game add up to the same sum,unlike in a zero-sum game. C) There is no stable equilibrium in a constant-sum game,unlike in a zero-sum game. D) The actions taken by each player is symmetrical in a constant-sum game,unlike in a zero-sum game. E) The equilibrium payoff in a constant-sum game is higher than the equilibrium payoff in a zero-sum game. -What is the difference between a constant-sum game and a zero-sum game?


A) In a constant-sum game,the players' payoffs are in complete conflict with each other unlike a zero-sum game.
B) The equilibrium payoffs in a constant-sum game add up to the same sum,unlike in a zero-sum game.
C) There is no stable equilibrium in a constant-sum game,unlike in a zero-sum game.
D) The actions taken by each player is symmetrical in a constant-sum game,unlike in a zero-sum game.
E) The equilibrium payoff in a constant-sum game is higher than the equilibrium payoff in a zero-sum game.

F) B) and E)
G) B) and D)

Correct Answer

verifed

verified

How do constant-sum games and non-constant-sum games differ from each other? Give an example of each.

Correct Answer

verifed

verified

A constant-sum game is one of pure confl...

View Answer

Showing 1 - 20 of 51

Related Exams

Exam 1

Introduction to Economic Decision Making

34 Questions

Exam 2

Optimal Decisions Using Marginal Analysis

46 Questions

Exam 3

Demand Analysis and Optimal Pricing

49 Questions

Exam 4

Estimating and Forecasting Demand

54 Questions

Exam 5

Production

51 Questions

Exam 6

Cost Analysis

53 Questions

Exam 7

Perfect Competition

55 Questions

Exam 8

Monopoly

52 Questions

Exam 9

Oligopoly

50 Questions

Exam 11

Regulation, Public Goods, and Benefit-Cost Analysis

49 Questions

Exam 12

Decision Making Under Uncertainty

47 Questions

Exam 13

The Value of Information

52 Questions

Exam 14

Asymmetric Information and Organizational Design

37 Questions

Exam 15

Bargaining and Negotiation

43 Questions

Exam 16

Auctions and Competitive Bidding

39 Questions

Exam 17

Linear Programming

45 Questions

Show Answer