Business

1.Suppose that two players are playing the following game. Player A can choose either Top or Bottom, and Player B can choose either Left or Right. The payoffs are given in the following table where the number on the left is the payoff to Player A, and the number on the right is the payoff to Player B.

 

Does Player A have a dominant strategy? If so, what is it?

A) Top is a dominant strategy for Player A

B) Bottom is a dominant strategy for Player A

C) Both of the above

D) None of the above

2.

Does Player B have a dominant strategy? If so, what is it?

A) Left is a dominant strategy for Player B

B) Right is a dominant strategy for Player B

C) Both of the above

D) None of the above

3.

For the next four questions, you’ll be asked whether a strategy combination is a Nash equilibrium or not. Player A plays Top and Player B plays Left

A) This is a Nash equilibrium

B) This is NOT a Nash equilibrium

4.

Player A plays Bottom and Player B plays Left

A) This is a Nash equilibrium

B) This is NOT a Nash equilibrium

5.

Player A plays Top and Player B plays Right

A) This is a Nash equilibrium

B) This is NOT a Nash equilibrium

6.

Player A plays Bottom and Player B plays Right

A) This is a Nash equilibrium

B) This is NOT a Nash equilibrium

7.

If each player plays her maximin strategy, what will be the outcome of the game?

A) Player A plays Top and Player B plays Left

B) Player A plays Bottom and Player B plays Left

C) Player A plays Top and Player B plays Right

D) Player A plays Bottom and Player B plays Right

8.

Now suppose the same game is played with the exception that Player A moves first and Player B moves second. Using the backward induction method discussed in the online class notes, what will be the outcome of the game?

A) Player A plays Top and Player B plays Left

B) Player A plays Bottom and Player B plays Left

C) Player A plays Top and Player B plays Right

D) Player A plays Bottom and Player B plays Right

9.

For the next five questions, consider a monopolist. Suppose the monopolist faces the following demand curve: P = 180 – 4Q. Marginal cost of production is constant and equal to $20, and there are no fixed costs. What is the monopolist’s profit maximizing level of output?

A) Q = 45

B) Q = 40

C) Q = 30

D) Q = 20

E) Q = 10

F) none of the above

10.

What price will the profit maximizing monopolist charge?

A) P = $100

B) P = $20

C) P = $60

D) P = $180

E) P = $80

F) none of the above

11.

How much profit will the monopolist make if she maximizes her profit?

A) Profit = $1,600

B) Profit = $3,200

C) Profit = $400

D) Profit = $1,200

E) Profit = $800

F) none of the above

12.

What is the value of consumer surplus?

A) CS = $400

B) CS = $150

C) CS = $1,600

D) CS = $600

E) CS = $512.5

F) none of the above

13.

Please take a moment to scroll to the bottom of the page and click the “Save and Continue Later” button. This will record your progress in the exam in case of a dropped internet or ANGEL connection. This will NOT stop the exam clock, so be sure to immediately re-enter the exam.

 

 

 

What is the value of the deadweight loss created by this monopoly?

A) Deadweight loss = $200

B) Deadweight loss = $400

C) Deadweight loss = $800

D) Deadweight loss = $512.5

E) Deadweight loss = $1,600

F) none of the above

14.

These next five problems consider tax incidence. Suppose the market supply and demand for guitars in Happy Valley are given by:

Demand: P = 1500 – 0.5Q

Supply: P = 150 + 0.25Q

What is the equilibrium price and quantity of the product?

A) P* = 400, Q* = 2200

B) P* = 100, Q* = 5400

C) P* = 900, Q* = 1200

D) P* = 600, Q* = 1800

E) none of the above

15.

What is the price elasticity of demand at the equilibrium price?

A) Elasticity = -0.666

B) Elasticity = -6

C) Elasticity = -3

D) Elasticity = -1.5

E) none of the above

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