ECON 201 Exam questions and
answers rated A+
A cartel is characterized by firms that act together in order to:
I. increase competition.
II. raise prices.
III. raise profit. - ANS✅✅II and III only
When producers engage in cartel-like behavior, they attempt to mimic the behavior of - ANS✅✅a
monopoly
A Nash equilibrium in game theory is defined as a situation in which: - ANS✅✅no player has an
incentive to change his or her strategy unilaterally.
Which of the following is a list of excludable and nonrival goods only? - ANS✅✅online video
games, a private beach, toll highways, cable Internet service
The difference between private goods and common resources is that common resources are: -
ANS✅✅nonexcludable, and private goods are excludable.
A college student who must pay fees toward a recreational facility that will be built after he
has graduated and moved away is a: - ANS✅✅forced rider
The tragedy of the commons is often the result of: - ANS✅✅nonexcludability and rivalry
Solving a tragedy of the commons problem could be done through:
I. establishment of property rights over the common resource.
II. the invisible hand.
III. government-armed protection. - ANS✅✅I and III only
A free rider is a person who - ANS✅✅receives the benefits of a good but avoids paying for it
, A dominant strategy is a strategy that: - ANS✅✅has a higher payoff than any other strategy no
matter what the other player does.
Oil and diamond cartels tend to be more successful than copper and plumbing cartels -
ANS✅✅true
Which statement about network goods is TRUE? - ANS✅✅A) They are goods that are usually sold
by large firms with a great deal of market power
B) They are goods that tend to have a large number of users or consumers.
C) They are goods whose value to one consumer increases the greater the total number of
consumers.
D) All of the answers are correct.
Facebook possesses: - ANS✅✅contestable market power
Music is a network good because: - ANS✅✅A) most people want to listen to music that is popular.
B) music that is popular is a more valuable good.
C) music that is popular offers more benefits to the listener than does music that is obscure.
D) All of the answers are correct.
The threat of new firms easily entering a market and taking customers away from an existing
firm is characteristic of a: - ANS✅✅contestable market.
A coordination game is a situation in which: - ANS✅✅the players are better off choosing the same
strategy than if they choose different strategies,
Suppose that some people drive on the left side of the road and some people drive on the
right side of the road. Is this a Nash equilibrium? - ANS✅✅No, because each person would prefer
to unilaterally change strategies.
Suppose that a firm plans to provide defense against asteroids striking the earth. Which of
the following is TRUE? - ANS✅✅Most people will not pay a firm for asteroid defense.
answers rated A+
A cartel is characterized by firms that act together in order to:
I. increase competition.
II. raise prices.
III. raise profit. - ANS✅✅II and III only
When producers engage in cartel-like behavior, they attempt to mimic the behavior of - ANS✅✅a
monopoly
A Nash equilibrium in game theory is defined as a situation in which: - ANS✅✅no player has an
incentive to change his or her strategy unilaterally.
Which of the following is a list of excludable and nonrival goods only? - ANS✅✅online video
games, a private beach, toll highways, cable Internet service
The difference between private goods and common resources is that common resources are: -
ANS✅✅nonexcludable, and private goods are excludable.
A college student who must pay fees toward a recreational facility that will be built after he
has graduated and moved away is a: - ANS✅✅forced rider
The tragedy of the commons is often the result of: - ANS✅✅nonexcludability and rivalry
Solving a tragedy of the commons problem could be done through:
I. establishment of property rights over the common resource.
II. the invisible hand.
III. government-armed protection. - ANS✅✅I and III only
A free rider is a person who - ANS✅✅receives the benefits of a good but avoids paying for it
, A dominant strategy is a strategy that: - ANS✅✅has a higher payoff than any other strategy no
matter what the other player does.
Oil and diamond cartels tend to be more successful than copper and plumbing cartels -
ANS✅✅true
Which statement about network goods is TRUE? - ANS✅✅A) They are goods that are usually sold
by large firms with a great deal of market power
B) They are goods that tend to have a large number of users or consumers.
C) They are goods whose value to one consumer increases the greater the total number of
consumers.
D) All of the answers are correct.
Facebook possesses: - ANS✅✅contestable market power
Music is a network good because: - ANS✅✅A) most people want to listen to music that is popular.
B) music that is popular is a more valuable good.
C) music that is popular offers more benefits to the listener than does music that is obscure.
D) All of the answers are correct.
The threat of new firms easily entering a market and taking customers away from an existing
firm is characteristic of a: - ANS✅✅contestable market.
A coordination game is a situation in which: - ANS✅✅the players are better off choosing the same
strategy than if they choose different strategies,
Suppose that some people drive on the left side of the road and some people drive on the
right side of the road. Is this a Nash equilibrium? - ANS✅✅No, because each person would prefer
to unilaterally change strategies.
Suppose that a firm plans to provide defense against asteroids striking the earth. Which of
the following is TRUE? - ANS✅✅Most people will not pay a firm for asteroid defense.
