3.A dominated strategy is a strategy where.

a) a player has another strategy that provides a lower payoff no matter what the other player does

b) a player has a strategy that will always result in a win-win situation for both players

c) a player has another strategy that provides a higher payoff no matter what the other player does

d) none of the above

4.The chance of a cooperative outcome in a game is reduced if

a) the one-time gain from cheating is significant compared to the cost of cheating

b) player interaction is not frequent

c) players are impatient

d) all of the above

5. In the Cournot model, the curve that traces out the relationship between the market price and a firm's

quantity when rival firms hold their outputs fixed is called a

a) reaction function

b) best response

c) residual demand curve

d) cournot equilibrium

6.Suppose in a Cournot duopoly that two firms, Firm 1 and Firm 2, face market demand

and both have marginal cost, . Firm 1's reaction function can be written as:

a) Q1=45-0.5Q2

b) Q1=25-0.5Q2

c) Q1=15-0.5Q2

d) Q1=10-0.5Q2

7. Bertrand duopolists, Firm 1 and Firm 2, face inverse market demand and both have marginal cost, . The equilibrium output this market will be:

a) 15

b) 20

c) 30

d) 40

8. Stackelberg duopolists, Firm 1 and Firm 2, face inverse market demand . Both have marginal cost, . If the follower takes the leader's output as fixed at Q₁, what is the equation of its reaction function?

a) 30-Q1=Q2

b) 15-Q1=Q2

c) 15-2Q1=Q2

d) 15-Q1/2=Q2

9. What of the following is completely true in long run, monopolistically competitive equilibrium?

a) the slope of the demand and average cost curves are the same, P = MC, and MC = MR.

b) the slope of the demand and average cost curves are negative, P > MC, and MC > MR

c) the slope of the demand and average cost curves are positive, P > MC, and MC = MR

d) the slope of the demand and average cost curves are the same, P > MC, and MC = MR.

10. Which of the following is not a characteristic of monopolistic competition?

a) The market is fragmented.

b) There is free entry and exit.

c) In the long-run equilibrium, firms earn positive profits.

d) Firms produce horizontally differentiated product