ECON7100-M50 Spring 2015

Self-Study12

1. Concurrent competing standards
   1. lower the average total cost of adopters due to scale economy.
   2. are wasteful because one standard is just as good as the other.
   3. encourage consumer purchase of durable goods before the dust is settled.
   4. offer more choices before prematurely committing to an inferior technology.
2. A dominant strategy
   1. always guarantees a collectively superior solution.
   2. always guarantees a collectively inferior solution.
   3. always exists in strategic games.
   4. has better payoffs regardless of what the strategy the other players might choose.
3. Tipping is
   1. An ever-escalating arms race that does not have an equilibrium solution.
   2. A fixed-level Nash equilibrium.
   3. A collectively superior solution.
   4. Both B and C.
4. Which of the following describes the outcome of an invisible-hand game?
   1. Individually smart, collectively dumb.
   2. Individually smart, collectively smart.
   3. Individually dumb, collectively smart.
   4. Individually dumb, collectively dumb.
5. 
   When the payoff curves in a congestion game are not symmetrical, uncoordinated individual activities often lead to a solution which
   1. is collectively optimal.
   2. may not be collectively optimal.
   3. may not be a Nash equilibrium.
   4. Both A and B.
6. Network goods tend to grow explosively
   1. After a critical mass is reached.
   2. Right from the beginning.
   3. Because they generate positive externality among themselves after a critical threshold.
   4. All of the above.
   5. Both A and C.
7. Which of the following is correct in a prisoner's dilemma game?
   1. The higher the cost of detecting defectors, the smaller will be the percentage of defectors.
   2. The percentage of defectors is not affected by the cost of detecting defectors.
   3. The higher the cost of detecting defectors, the larger will be the percentage of defectors.
   4. The lower the cost of detecting defectors, the larger will be the percentage of defectors.
8. Economic growth is an invisible-hand game within a larger context of
   1. a tragedy of the commons.
   2. a gender-preference game.
   3. a coordination game.
   4. a critical-mass game.
9. 
   In a coordination game with multiple stable equilibriums,
   1. the chosen solution is always collectively superior to the unchosen one.
   2. the chosen solution is a Nash equilibrium.
   3. it is easy to migrate from one equilibrium to another.
   4. Both A and B.
10. Ignoring software piracy for home use serves to
    1. lock in these users as lobbyists for the same software to their future employers.
    2. increase the cost of enforcing legal licensing.
    3. increase the support cost of the software company.
    4. delay the building up of the user network to the threshold size for explosive growth.
11. 
    Adoption of networked goods often stops short of 100% because
    1. non-adopters can free ride on adopters.
    2. the payoff for non-adopters is lower than the adopters.
    3. networked goods are strictly public goods.
    4. networked goods are strictly private goods.
12. 
    In a coordination game, the payoff of those who pursue L _____ as _____ people pursue R.
    1. decreases; more
    2. increases; more
    3. decreases; fewer
    4. increases; fewer
    5. Both A and D.
13. 
    In this diagram of payoffs where blue represents boy preference and red represents girl preference, which of the following is true?
    1. At B, some parents would opt for girls because there is a scarcity of girls.
    2. If the temporary situation happens to be at A which is collectively superior, there is a tendency to stay there.
    3. The equilibrium solution at B is not stable because A is collectively superior.
    4. Those who prefer sons always have higher payoffs than those who prefer girls even though son-preferred parents can have higher average payoffs by having fewer sons.
14. 
    Fill in the blanks? _______ a critical mass is reached, the payoff for joining is ______ than the payoff for not joining.
    1. Before; higher
    2. After; lower
    3. After; higher
    4. Both A and C.
15. The obesity game is an illustration that many seemingly benign invisible-hand games are
    1. individually and collectively smart.
    2. individually smart, but collectively dumb.
    3. a coordination game.
    4. a critical-mass game.
16. Which of the following products have major network externality effects?
    1. coffee
    2. sun glasses
    3. Facebook
    4. Twitter
    5. Both C and D.
17. 
    In this diagram of payoffs where blue represents boy preference and red represents girl preference, which of the following is true?
    1. If the temporary situation happens to be at A which is collectively superior, there is a tendency to stay there.
    2. The equilibrium solution at B is not stable because A is collectively superior.
    3. At B, some parents would opt for girls because there is a scarcity of girls.
    4. B is a stable solution because son preference is a dominant strategy.
18. In order to prevent defection from an unstable but collectively superior solution in a prisoner's dilemma game,
    1. the potential gain of defection could be taxed away.
    2. the potential loss of not defecting could be offset.
    3. people should be allowed to do what they want.
    4. people should be told they are in a prisoner's dilemma.
    5. Both A and B.
19. Which of the following describes the outcome of a prisoner's dilemma game?
    1. Individually smart, collectively dumb.
    2. Individually smart, collectively smart.
    3. Individually dumb, collectively smart.
    4. Individually dumb, collectively dumb.
20. 
    In a congestion game, the payoff of those who pursue L _____ as _____ people pursue R.
    1. decreases; more
    2. increases; more
    3. decreases; fewer
    4. increases; fewer
    5. Both B and C.