SUMMER TERM 2015
ECON2O01: MICROECONOMICS
TIME ALLOW"ANCE: 3 hours
Answer ALL questions from Pari A on the Multiple Cho'ice Question sheet. Answer THREE questio,ns
frorn, Part B, 'including at least ONE ftom Part B.I and at least ONE from Part B.II.
Port A carries y'O per cent of the total mark and quest'ions in Part B carry 20 per cent of the total
mark each.
In cases where a student answers more que.strons than requested by the eram,ination rubric, the poli,cy
of the Econamics Departmertt is that the sttt"dent's .first set of answers up to the- rr4uired number u,ill
be the ones that count (not the best answers). All remaining answers will be,ignored.
PART A
Answer ALL questions frorn this section on the lVlultiple Choice Question sheet. For each cluestion
there are four possible answers labelled (.), (b), (c) and (d). Indicate rvhich -r,-ou think is correct by
placing a horizontal mark in the corresponding box on the answer sheet. To get full marks for this
section it is not necessary to provide any explanation for rrour answ€rs.
r L6 ='a"4
(I) Consider the following two person garne.
WlU 3. lv,f 1-[X\
?-\
,$,rr't
E'
L R P
3/r, u (9,9 (0,0) ( 1.2.0.9')
x,{P
(0"0
fuqD (0,0) €,4) (0,0) (1.4,1.5)
*(0,0)
)
I
[ (r:). tr'ut = t
P (1,L?) (0,0) (0,0)
I
MP (0,0) (1.5,L4) (0,0) (0.0,1 ,] V ?*tfl{il={
A.1 Which of the following statements is true?
(a) The game can be solved using dorninance arguments. FJif
(ftlr)
I
The game is a zero-sum game v
pure strategies are weakly dorninated.
This game has only two Nash equilibria.
ECON2001 1
,l?t '-
,IBI b
et
F s P
1 9nr
( ?r 1l
(lr! -") ]{ 0,,s (t l,o 1)
72 /orq)
Gru) (]ril (oro) [l-u rt +)
, A.2 This garne has a mixed strategy Nash equilibrium where the column player plays tr with
probability 2/5 and -R with probabilitl.3/5 and where the strategy for the row player is:
(a) Row plays D with probability 215 ar-LdU with probability 3/5 .
(b) Row plays P.
Row plays MP.
plays Lr with probabllity 215 and D with probability 3/5.
A.3 Suppose we no$: allorn'- the column player to move first and then the row pla.ver moves second.
This change will affect the outcome of the game in the follow-ing way.
(a) The number of Nash equilibria increases.
(b) (D, nfP) will be plaved.
(D, R) will be plaved.
(d) I) will be played.
A.4 Suppose we revert to the original game with simultaneous moves, but now the game is
plaved three times one after the other. We atternpt to build a subgarne perfect equilibriurn
(SPE) of the twice-repeated game where (U, P) is plaved in the first period trncl. if no deviatiorr
frorn ([/, P) occurred in the first period. then (tf,I) is played in the second period and (D" E)
in the third period. If pla'v'er l deviates from (t/,P) then (D,R) is played twice and if plaver 2
deviates from ([/. P) then (U, L) is played twice. Which of the following statements is true?
(a) This is SPtr.
(b) This is not a SPE because at SPtr it is essential that a Nash equilibrium is played in everv
/- -- Period.
( (c) This is not a SPE because the column plaver can deviate and earn strictlv more than
\.-4laylng out (U, P) then {U, L) then (D, rR).
(d) This is not a SPE because the row player can deviate and earn strictly more than playing
out (t/, P) then (U, L) then (D, E).
ECON2001 2 CONTINUED
{sv l-z+j+z= a'7 flo ?-*L=++/
Col o-1 t 3+3 = 6-"1
)"*e\) ,6-rh
ECON2O01: MICROECONOMICS
TIME ALLOW"ANCE: 3 hours
Answer ALL questions from Pari A on the Multiple Cho'ice Question sheet. Answer THREE questio,ns
frorn, Part B, 'including at least ONE ftom Part B.I and at least ONE from Part B.II.
Port A carries y'O per cent of the total mark and quest'ions in Part B carry 20 per cent of the total
mark each.
In cases where a student answers more que.strons than requested by the eram,ination rubric, the poli,cy
of the Econamics Departmertt is that the sttt"dent's .first set of answers up to the- rr4uired number u,ill
be the ones that count (not the best answers). All remaining answers will be,ignored.
PART A
Answer ALL questions frorn this section on the lVlultiple Choice Question sheet. For each cluestion
there are four possible answers labelled (.), (b), (c) and (d). Indicate rvhich -r,-ou think is correct by
placing a horizontal mark in the corresponding box on the answer sheet. To get full marks for this
section it is not necessary to provide any explanation for rrour answ€rs.
r L6 ='a"4
(I) Consider the following two person garne.
WlU 3. lv,f 1-[X\
?-\
,$,rr't
E'
L R P
3/r, u (9,9 (0,0) ( 1.2.0.9')
x,{P
(0"0
fuqD (0,0) €,4) (0,0) (1.4,1.5)
*(0,0)
)
I
[ (r:). tr'ut = t
P (1,L?) (0,0) (0,0)
I
MP (0,0) (1.5,L4) (0,0) (0.0,1 ,] V ?*tfl{il={
A.1 Which of the following statements is true?
(a) The game can be solved using dorninance arguments. FJif
(ftlr)
I
The game is a zero-sum game v
pure strategies are weakly dorninated.
This game has only two Nash equilibria.
ECON2001 1
,l?t '-
,IBI b
et
F s P
1 9nr
( ?r 1l
(lr! -") ]{ 0,,s (t l,o 1)
72 /orq)
Gru) (]ril (oro) [l-u rt +)
, A.2 This garne has a mixed strategy Nash equilibrium where the column player plays tr with
probability 2/5 and -R with probabilitl.3/5 and where the strategy for the row player is:
(a) Row plays D with probability 215 ar-LdU with probability 3/5 .
(b) Row plays P.
Row plays MP.
plays Lr with probabllity 215 and D with probability 3/5.
A.3 Suppose we no$: allorn'- the column player to move first and then the row pla.ver moves second.
This change will affect the outcome of the game in the follow-ing way.
(a) The number of Nash equilibria increases.
(b) (D, nfP) will be plaved.
(D, R) will be plaved.
(d) I) will be played.
A.4 Suppose we revert to the original game with simultaneous moves, but now the game is
plaved three times one after the other. We atternpt to build a subgarne perfect equilibriurn
(SPE) of the twice-repeated game where (U, P) is plaved in the first period trncl. if no deviatiorr
frorn ([/, P) occurred in the first period. then (tf,I) is played in the second period and (D" E)
in the third period. If pla'v'er l deviates from (t/,P) then (D,R) is played twice and if plaver 2
deviates from ([/. P) then (U, L) is played twice. Which of the following statements is true?
(a) This is SPtr.
(b) This is not a SPE because at SPtr it is essential that a Nash equilibrium is played in everv
/- -- Period.
( (c) This is not a SPE because the column plaver can deviate and earn strictlv more than
\.-4laylng out (U, P) then {U, L) then (D, rR).
(d) This is not a SPE because the row player can deviate and earn strictly more than playing
out (t/, P) then (U, L) then (D, E).
ECON2001 2 CONTINUED
{sv l-z+j+z= a'7 flo ?-*L=++/
Col o-1 t 3+3 = 6-"1
)"*e\) ,6-rh
