Top 80+ Solved MicroEconomics, Theory and Applications 1 MCQ Questions Answer
Q. Which of the following is a nonzero-sum game?
a. prisoners’ dilemma
b. chess
c. competition among duopolists when market share is the payoff
d. all of the above
Q. Which of the following is a zero-sum game?
a. prisoners’ dilemma
b. chess
c. a cartel member’s decision regarding whether or not to cheat
d. all of the above
Q. A plan of action that considers the reactions of rivals is an example of
a. accounting liability
b. strategic behaviour
c. accommodating behaviour
d. risk management
Q. 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
Q. A strategy that is best regardless of what rival players do is called
a. first-mover advantage
b. a nash equilibrium strategy
c. tit-for-tat
d. a dominant strategy
Q. 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
Q. 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
Q. Sequential games can be solved using
a. tit-for-tat
b. dominated strategies
c. backward induction
d. risk averaging
Q. A firm that is threatened by the potential entry of competitors into a market builds excessproduction capacity. This is an example of
a. a prisoners’ dilemma
b. collusion
c. a credible threat
d. tit-for-tat
Q. Implicit costs are:
a. equal to total fixed costs
b. comprised entirely of variable costs
c. “payments” for self-employed resources
d. always greater in the short run than in the long run
Q. Which would be an implicit cost for a firm? The cost:
a. of worker wages and salaries for the firm
b. paid for leasing a building for the firm
c. paid for production supplies for the firm
d. of wages foregone by the owner of the firm.
Q. If a firm’s revenues just cover all its opportunity costs, then:
a. normal profit is zero
b. economic profit is zero
c. total revenues equal its explicit costs
d. total revenues equal its implicit costs
Q. Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used toproduce it. Which is true?
a. the firm will earn accounting and economic profits
b. the firm will face accounting and economic losses
c. the firm will face an accounting loss, but earn economic profits
d. the firm may earn accounting profits, but will face economic losses
Q. The short run is a time period in which:
a. all resources are fixed
b. the level of output is fixed
c. the size of the production plant is variable
d. some resources are fixed and others are variable
Q. The law of diminishing returns states that:
a. as a firm uses more of a variable resource, given the quantity of fixed resources, the average product of the firm will increase
b. as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease
c. in the short run, the average total costs of the firm will eventually diminish
d. in the long run, the average total costs of the firm will eventually diminish