Q. A plan of action that considers the reactions of rivals is an example of
✅ Correct Answer: (B)
strategic behaviour
MicroEconomics, Theory and Applications 1 MCQs and Notes
Q. Which of the following is a zero-sum game?
✅ Correct Answer: (B)
chess
Q. Which of the following is a nonzero-sum game?
✅ Correct Answer: (A)
prisoners’ dilemma
Q. In game theory, a situation in which one firm can gain only what another firm loses is called a
✅ Correct Answer: (C)
zero-sum game
Q. Which of the following is an example of a game theory strategy?
✅ Correct Answer: (A)
you scratch my back and i’ll scratch yours
Q. Game theory is concerned with
✅ Correct Answer: (B)
the choice of an optimal strategy in conflict situations
Q. A firm may decide to increase its scale so that it has excess production capacity because, by doing so, it is able to
✅ Correct Answer: (B)
establish a credible deterrent to the entry of competing firms
Q. An oligopolist may engage in short-run behaviour that results in lower profits if
✅ Correct Answer: (D)
it lends credibility to the firm\s threats
Q. Which one of the following conditions is required for the success of a tit-for-tat strategy?
✅ Correct Answer: (B)
the number of oligopolists in the industry must be relatively small
Q. Until recently, medical doctors and lawyers have been prohibited from engaging in competitive advertising. If the prisoners’ dilemma applies to this situation, then the presence of this restriction would be likely to
✅ Correct Answer: (A)
increase profits earned by individuals in these professions