Practice Questions
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In game theory, a dominant strategy is defined as a strategy that is the best choice for a player regardless of what the other players do. Which of the following scenarios best illustrates a dominant strategy?
A firm that lowers prices is always making a smart choice. Other options are incorrect because Choosing to cooperate in a Prisoner's Dilemma isn't alw...
In a game where both players have the option to cooperate or defect, which of the following scenarios represents a situation where each player's choice is their dominant strategy?
When one player cooperates and the other defects, the defector gets the best outcome. Other options are incorrect because Many think cooperation is al...
In a game where two players have the option to either cooperate or betray, which of the following statements best illustrates the concept of strategic dominance over risk dominance?
Player A's choice to betray is risk dominant. Other options are incorrect because This suggests Player A will always betray, but it doesn't show the b...
In a non-cooperative game, if player A has a dominant strategy that ensures the best response against player B's strategies, what can be concluded about player A's choice?
Player A will always pick the dominant strategy. Other options are incorrect because This suggests player A needs player B to cooperate to choose the ...
In a game with incomplete information where players have dominant strategies, which of the following statements about mixed strategies and Nash equilibrium is true?
A Nash equilibrium can happen with mixed strategies. Other options are incorrect because Some might think players always pick one clear choice; It's a...
In game theory, a dominant strategy is defined as a strategy that is the best choice for a player regardless of what the other players do. Which of the following scenarios best illustrates a dominant strategy?
A firm that lowers prices all the time is making the best choice. Other options are incorrect because Choosing to cooperate in a Prisoner's Dilemma is...
In a two-player game, if Player A has a strategy that always results in a worse outcome regardless of what Player B chooses, this strategy is known as a:
A dominated strategy is one that is always worse than another option. Other options are incorrect because A dominant strategy is the best choice for a...
In a two-player game, if both players have a dominant strategy that leads to a Nash equilibrium, what can be concluded about their strategies?
Each player chooses the best move based on what the other player is doing. Other options are incorrect because It's a common mistake to think both pla...
Arrange the following steps in the correct order to explain the concept of dominant strategies in game theory: A) Identify the payoffs for each player in the game, B) Explore the possible strategies available to each player, C) Determine if any player's strategy yields a higher payoff regardless of others' choices, D) Predict the likely outcomes based on the identified dominant strategies.
First, we need to find out the payoffs for each player. Other options are incorrect because This order starts with strategies before knowing the payof...
In a game theory scenario, if Firm A has a dominant strategy to always set a high price, it implies that Firm B will also choose to set a high price in response, regardless of its own dominant strategy.
Firm B's choice depends on its own strategy. Other options are incorrect because This answer assumes Firm B must always match Firm A's price; This opt...
In game theory, a strategy is considered dominant if it provides the highest payoff for a player, regardless of the strategies chosen by the other players. This concept is crucial for understanding competition in markets, particularly in oligopolies. A firm with a dominant strategy is likely to choose a __________ pricing strategy to maximize its profits.
A dominant pricing strategy means the firm will always choose the best option for itself. Other options are incorrect because Some might think competi...
In a market where two firms must decide whether to advertise or not, which of the following scenarios best illustrates a dominant strategy for both firms?
When both firms choose to advertise, they each get the best possible outcome. Other options are incorrect because Choosing not to advertise may seem s...
In a competitive market, if Firm A's pricing strategy is to always undercut its competitors to maximize its profits, how does this relate to dominant strategies? A: Firm A's strategy is to maximize profit regardless of competitors' prices :: B: Firm A's strategy is dependent on competitors' reactions :: C: Firm A's strategy is based on historical pricing trends :: D: Firm A's strategy is irrelevant to market dynamics.
Firm A's plan to always lower prices means it focuses on its own profits. Other options are incorrect because This answer suggests Firm A changes its ...
If a firm in an oligopoly consistently chooses to lower its prices regardless of competitors' actions, which of the following best explains this behavior?
The firm has found a way to always do better by lowering prices. Other options are incorrect because This suggests the firm is only reacting to custom...
In a duopoly where both firms can choose to advertise or not, if Firm A has a dominant strategy of not advertising, what can be inferred about Firm B's optimal strategy?
If Firm A decides not to advertise, it means they believe this choice gives them the best outcome. Other options are incorrect because Some might thin...
Two competing coffee shops, A and B, are deciding whether to offer a discount to attract more customers. If both offer discounts, they split the market and both have average profits. If neither offers a discount, they maintain their current profits. If one offers a discount while the other does not, the discounting shop attracts most customers, resulting in higher profits for the discounting shop and lower for the other. Which of the following best describes the dominant strategy for both coffee shops?
Both shops want to attract customers. Other options are incorrect because This idea assumes that not offering discounts is always better; This suggest...
Which of the following statements accurately describe dominant strategies in game theory? Select all that apply.
Other options are incorrect because A dominant strategy does not always give the best result; A dominant strategy can be good in the long run too....
In an oligopoly, if Firm A has a dominant strategy to lower prices, what can be inferred about Firm B's strategy?
Firm B will likely lower its prices too. Other options are incorrect because This option suggests Firm B will ignore Firm A's actions; This choice imp...
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