The prisoner's dilemma is an example of:
a. A sequential game
b. A non-cooperative game.
c. A shirking game
d. A dating game
QUESTION 2An individual will never buy complete insurance if:
a. he or she is risk averse.
b. insurance premiums are unfair.
c. he or she is a risk taker.
d. insurance premiums are fair.
QUESTION 3The largest problem faced in cartel pricing agreements such as OPEC is:
a. detecting violations of quota barriers by cartel participants
b. arriving at a profit maximizing price
c. attracting participants in the cartel
d. none of the above
QUESTION 4When grocery stores offer discount coupons on Sunday papers, it is trying to
a. Price discriminate
b. Undercut its competition
c. Reward the frequent readers
d. Provide a social service
QUESTION 5What property of the von-Neumann Morgenstern utility function is related to risk aversion?
a. Its upward slope
b. Its downward slope
c. Its convexity
d. Its concavity
QUESTION 6Effective collusion generally is more difficult as the number of oligopolistic firms involved increases.
a. true b. false
QUESTION 7Which of the following is not an example of price discrimination?
a. Senior citizen discount at the movies
b. Grocery coupons
c. Children haircuts
d. Charging a higher price for ice-cream during the summer and a lower price in the winter
QUESTION 8Risk aversion is best explained by:
a. timidness.
b. increasing marginal utility of wealth.
c. constant marginal utility of wealth.
d. decreasing marginal utility of wealth.
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