Question 1 2.5 / 2.5 points
Game theory is concerned with
A) predicting the results of bets placed on games like roulette.
B) the choice of an optimal strategy in conflict situations.
C) utility maximization by firms in perfectly competitive markets.
D) the migration patterns of caribou in Alaska.
Question 2 2.5 / 2.5 points
A major threat to longer-term profits exists when barriers to entry into an industry are high.
True
False
Question 3 2.5 / 2.5 points
Which of the following is an example of a game theory strategy?
Question 4 2.5 / 2.5 points
Which of the following is correct concerning opportunity cost?
A) Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have
purchased anyway.
B) To compute opportunity costs, you should subtract benefits from costs.
C) Opportunity costs and the idea of trade-offs are not closely related.
D) Rational people should compare various options without considering opportunity costs.
Question 5 2.5 / 2.5 points
To achieve more market power, firms can:
A) Raise their profit margin on prices
B) Differentiate their products from the products of their rivals
C) Lobby the government to eliminate barriers to entry
D) Reduce their costs of production
E) Advertise that they charge low prices
Question 6 2.5 / 2.5 points
Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure above. To increase her profit, Carol should
Question 7 2.5 / 2.5 points
Game theory refers to
A) a plan for the actions that a player in a game will take under every conceivable circumstance that the player might face.
B) a situation in which each player chooses the strategy that yields the highest payoff, given the strategy chosen by the other players.
C) optimal decision making by microeconomic agents.
D) the branch of microeconomics concerned with the analysis of optimal decision making in competitive situations
Question 8 2.5 / 2.5 points
In perfect competition, a firm's marginal revenue equals its:
A) Price
B) Supply curve
C) Total revenue
D) Average revenue
Question 9 2.5 / 2.5 points
A dominant strategy
A) is a strong strategy.
B) guarantees a Nash equilibrium.
C) is a strategy that is better for a player than any other the player might choose, regardless of the other player’s strategy.
D) depends on the other player’s strategy
Question 10 0 / 2.5 points
Which one of the following would Adam Smith agree is an example of market failure requiring government interference?
Question 11 2.5 / 2.5 points
In the long run, the monopolist can remain in the industry at a price that is just below long-run average costs.
True
False
Question 12 2.5 / 2.5 points
Which of the following is the best example of a public good?
A) an amusement park like Disney World
B) a civic center owned and operated by the government
C) a state university
D) a regional flood control project
Question 13 2.5 / 2.5 points
In game theory, a choice that is optimal for a firm no matter what its competitors do is referred to as the dominant strategy.
True
False
Question 14 2.5 / 2.5 points
The above figure shows the total revenue curve for Dizzy Discs. The demand curve for CD's sold by Dizzy Discs
A) has positive slope.
B) has negative slope.
C) is horizontal.
D) is vertical.
Question 15 2.5 / 2.5 points
In the long run, firms under monopoly or oligopoly must earn normal profits.
True
False
Question 16 2.5 / 2.5 points
Which one of the following does not occur in perfect competition?
Question 17 2.5 / 2.5 points
Which of the following will increase the likelihood a person will experience periods of poverty?
Question 18 2.5 / 2.5 points
As a firm loses its monopoly status, becoming more competitive as new firms enter the market, the ex-monopoly firm's demand curve:
Question 19 2.5 / 2.5 points
According to Adam Smith’s theory of the “invisible hand,” businesses will produce the products consumers most desire because
Question 20 2.5 / 2.5 points
Which one of the following characteristics does not apply to oligopoly?
Question 21 2.5 / 2.5 points
Externalities can be positive because
Question 22 2.5 / 2.5 points
In oligopoly:
A) firms compete with each other only by raising and lowering quantity because prices are fixed
B) the fewness of firms creates mutual interdependence in pricing among the firms
C) the firm is the industry
D) firms have no difficulty entering and leaving the market
E) the firm having a natural monopoly sets price for the others
Question 23 2.5 / 2.5 points
Perfect competition occurs in a market where there are many firms each selling:
Question 24 2.5 / 2.5 points
One difference between perfect competition and monopolistic competition is that:
Question 25 2.5 / 2.5 points
Price discrimination refers to charging different products in different markets.
True
False
Question 26 2.5 / 2.5 points
In game theory, the outcome or consequence of a strategy is referred to as the
A) payoff.
B) penalty.
C) reward.
D) end-game strategy.
Question 27 2.5 / 2.5 points
A game that involves multiple moves in a series of identical situations is called a
A) sequential game.
B) repeated game.
C) zero-sum game.
D) nonzero-sum game.
Question 28 2.5 / 2.5 points
Game theory refers to
A) a plan for the actions that a player in a game will take under every conceivable circumstance that the player might face.
B) a situation in which each player chooses the strategy that yields the highest payoff, given the strategy chosen by the other players.
C) optimal decision making by microeconomic agents.
D) the branch of microeconomics concerned with the analysis of optimal decision making in
competitive situations.
Question 29 2.5 / 2.5 points
Which of following is an example of a monopolistically competitive firm?
Question 30 2.5 / 2.5 points
A game that involves interrelated decisions that are made over time is a
A) sequential game.
B) repeated game.
C) zero-sum game.
D) nonzero-sum game.
Question 31 2.5 / 2.5 points
A firm that considers the potential reactions of its competitors when it makes a decision is engaged in strategic behavior.
True
False
Question 32 2.5 / 2.5 points
Public goods can be
A) provided privately
B) provided publicly
C) subject to free rider problems
D) all of the above
Question 33 2.5 / 2.5 points
To cure the problem of externalities, such as pollution, economists recommend that government:
Question 34 2.5 / 2.5 points
If a good is characterized by easy exclusion but many may concurrently use it without reducing the amount available for others, the good is a:
A) private good
B) common property resource
C) toll goods
D) public good
Question 35 2.5 / 2.5 points
Extensive advertising can be a powerful barrier to entry into an industry:
True
False
Question 36 2.5 / 2.5 points
_______, in his 1776 work _______, introduced the concept of the invisible hand.
A) Eli Hecksher; The Wealth of Nations
B) Adam Smith; The Wealth of Nations
C) Paul Samuelson; Economics
D) Karl Marx; The Wealth of Nations
Question 37 0 / 2.5 points
Pure Strategy is:
A) is a specific choice of a strategy from the player’s possible strategies in the game, whereas a mixed strategy is a choice between quantity and price optimization.
B) is a specific choice of a strategy outside of the player’s possible strategies in the game, whereas a mixed strategy is a choice among two or more pure strategies according to pre-specified probabilities.
C) is a specific choice of a strategy outside of the player’s possible strategies in the game, whereas a mixed strategy is a choice between quantity and price optimization.
D) is a specific choice of a strategy from the player’s possible strategies in the game, whereas a mixed strategy is a choice among two or more pure strategies according to pre-specified probabilities
Question 38 2.5 / 2.5 points
Suppose Kevin offers to match his competitors' price in an oligopoly market. This will have the effect of
Question 39 2.5 / 2.5 points
Under which type of market structure is price rigidity often predicted?
Question 40 2.5 / 2.5 points
Industrial policy
A) is strategic behavior that takes place at the national level.
B) may be accomplished by protecting and subsidizing selected industries.
C) is intended to provide competitive advantage to selected firms.
D) All of the above.
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