Please, answer all questions; using the chapter review PowerPoints. Economics HW3 is the assignment and the other attachments are to use to answer the questions on the Economics HW3. Document Preview:...

TTs200513_51722_13 Economics Assignment
Answers are marked in Bold and Blue
Table 17-14
This table shows a game played between two players, A and B. The payoffs in the table are shown as
(Payoff to A, Payoff to B).
B
Right Left
A
Up (2, 2) (3, 1)
Down (1, 3) (0, 0)
____ 1. Refer to Table 17-14. If player A chooses his/her best strategy, player B should
a. choose right and earn a payoff of 2.
. choose right and earn a payoff of 3.
c. choose left and earn a payoff of 1.
d. choose left and earn a payoff of 0.
____ 2. Refer to Table 17-14. If both players choose their best strategies, player A will earn a payoff of
a. 0.
. 1.
c. 2.
d. 3.
____ 3. Refer to Table 17-14. Which of the following statements about this game is true?
a. Up is a dominant strategy for A and Right is a dominant strategy for B.
. Up is a dominant strategy for A and Left is a dominant strategy for B.
c. Down is a dominant strategy for A and Right is a dominant strategy for B.
d. Down is a dominant strategy for A and Left is a dominant strategy for B.
____ 4. Refer to Table 17-14. Which outcome is the Nash equili
ium in this game?
a. Up-Right
. Up-Left
c. Down-Right
d. Down-Left
____ 5. In general, game theory is the study of
a. how people behave in strategic situations.
. how people behave when the possible actions of other people are i
elevant.
c. oligopolistic markets.
d. all types of markets, including competitive markets, monopolistic markets, and
oligopolistic markets.
____ 6. Game theory is important for understanding which of the following market types?
a. perfectly competitive and oligopolistic markets
. perfectly competitive markets but not oligopolistic markets
c. oligoplistic but not perfectly competitive markets
d. neither oligopolistic nor perfectly competitive markets.
Exercise Questions
Chapter 7
Question 1. Comparative advantage refers to the additional benefit or an advantage that firms has
over their competitor that gives it additional sales, margins and also assists in retaining its
customers. A firm usually attains comparative advantage in two ways: firstly, by producing
certain goods at a price that is lower than its competitors and secondly, producing certain
commodity that has some different feature as compared to its competitors. Hence, a firm would
allocate its resources to those products that offer it a comparative advantage. So, a make use of
comparative advantage in allocating its resources.
The firm can attain comparative advantage through various factors such as cost structure,
distribution network, customer support, product offering, governance or management and the
amount of assets.
Question2. Best practices frontier refers to the production possibility curve that indicates the
various choices that a firm has. If the resources are fully and efficiently utilized then the firm
would be on the production possibility curve and if it is inefficiently utilized then it would be on
any point inside the production possibility curve. It is explained as what the best an organization
could do with the available resources and technology at the same time to gain competitive
advantage. In case of competitive advantage also resources are utilized in such a manner that it
helps an organization to attain maximum revenue by controlling its costs.
Question 3. Increasing expenditure on advertising could deter market entry of the competitive
players. As various companies spend huge amount of money in order to attract the customers,
make them aware about the company’s products as well as create
and image of the product.
They are considered as sunk cost of a business and would be useful only if the product have...