Question 1The difference between game trees and decision trees is:Select one:A. that game trees are not useful in strategic situationsB. that decision trees describe actions that depend on the behavior of rivalsC. that game trees have interactive payoffsD. that decision trees are a function of many individuals and the state of natureE. none of the above

Question 2If a firm has a dominant strategy:Select one:A. its optimal strategy depends on the play of rivalsB. its optimal strategy is always the same, even if payoffs changeC. it is determined by the behavior of only one key rivalD. it receives the same profits regardless of the strategy of rivalsE. its optimal strategy is independent of the play of rivals

Question 3A Nash equilibrium occurs when:Select one:A. each player has a dominant strategyB. each player receives the same final payoffC. each player believes it is doing the best it can given the behavior of rivalsD. there is no dominant strategy for any playerE. payoffs are independent of the actions taken by rivals

Question 4If player 1 has a dominant strategy, then player 2:Select one:A. must also have a dominant strategyB. may or may not have a dominant strategy, but will always lead to a Nash equilibriumC. may or may not have a dominant strategyD. will not be able to reach an optimal solution to the gameE. will block this dominant strategy and force player 1 to another strategy

Question 5Getting to a Nash equilibrium requires:Select one:A. each knowing the opponent's payoffs and cooperationB. knowing the opponent's payoffs but not cooperationC. cooperation but not knowing the opponent's payoffsD. neither cooperation nor knowing the opponent's payoffsE. either cooperation or knowing the opponent's payoffs, depending on the game

Question 6Given the following payoff matrix, who has a dominant strategy? 
 Select one:A. it depends on what the other player doesB. both playersC. neither playerD. A does; B doesn'tE. B does; A doesn't

Question 7Given the following payoff matrix, what will A's profits be? Select one:A. 1B. 2C. 3D. 4E. unknown until B's action is observed

Question 8Which pair of strategies would cooperative cartel members A and B choose given this payoff matrix? 
 Select one:A. W, YB. W, ZC. X, YD. X, ZE. eitherX, Y or W, Z

Question 9Which pair of strategies would competing firms A and B choose given this payoff matrix? 
 Select one:A. W, YB. W, ZC. X, YD. X, ZE. Either X, Y or W, Z

Question 10Strategic foresight is the ability to make decisions today that are rational based on:Select one:A. complete uncertainty about the futureB. our best information about what will happen in the futureC. what we know only about behavior in the pastD. information that we have only about our own behavior in the pastE. incorrect information about the past

Question 11A subjective definition of probability is:Select one:A. a weighted average of different peoples' degrees of certainty of an event's occurringB. a theoretical probability distributionC. a person's degree of certainty of an event's occurringD. an expected value of a particular outcomeE. the number of occurrences of an event in a large number of repetitions of an experiment

Question 12You pay $3.75 to roll a normal die 1 time. You get $1 for each dot that turns up. Your expected profit from this venture is:Select one:A. -$0.75B. -$0.25C. $0.25D. $3.00E. $3.50

Question 13Billy Joe Bob thinks he will win $3 with probability P, otherwise he will win $11. His expected payoff is:Select one:A. $3 + $8PB. $11 - $8PC. $7D. $3 + $11PE. $11 - $3P

Question 14Betty Gamble is willing to pay exactly, but not more than, $20 to get a deal where she has a 1/3 chance of winning $30 and a 1/6 chance of winning $6 and will win $20 otherwise. Betty is:Select one:A. risk-averse and profit maximizingB. risk-averse, not profit maximizingC. risk loving and profit maximizingD. risk loving, not profit maximizingE. risk-neutral

Question 15A company chooses one of four options; then nature decides whether the choice works. If it does not work, the company has two updating options, each with three possible payoffs. How many decision forks are on the tree depicting this?Select one:A. 5B. 12C. 17D. 28E. 36