Question 1

Which of the following best describes the principle of optimization using total value?

Accepted Answer

Choose the option with the highest total value.

Question 2

Suppose you are deciding between two job offers. Job A pays $ \$3,000 $ per month and offers $ \$500 $ in benefits. Job B pays $ \$2,800 $ per month and offers $ \$900 $ in benefits. Using total value optimization, which job should you choose?

Accepted Answer

Job A, because its total value is $ \$3,500 $.

Question 3

Which of the following is a key feature of marginal analysis in optimization?

Accepted Answer

It focuses on the additional benefit and cost of moving from one option to another.

Question 4

A student is deciding whether to spend an extra hour studying or to go out with friends. The marginal benefit of studying is a higher grade worth $ \$20 $, and the marginal cost is missing out on $ \$15 $ worth of enjoyment. According to marginal analysis, what should the student do?

Accepted Answer

Study, because the marginal benefit ($ \$20 $) exceeds the marginal cost ($ \$15 $).

Question 5

Which of the following statements about Nash equilibrium is correct?

Accepted Answer

Each player chooses a strategy that is a best response to the strategies of the other players.

Question 6

In a two-player game, both players have identical answers when using which optimization technique?

Accepted Answer

Total value and marginal analysis

Question 7

Which of the following is an example of a zero-sum game?

Accepted Answer

Rock-paper-scissors

Question 8

A person is choosing between three alternatives. The total value of A is $ \$100 $, B is $ \$120 $, and C is $ \$110 $. According to the optimization using total value, which alternative should be chosen?

Accepted Answer

B

Question 9

Which of the following best describes the process of optimization using marginal analysis?

Accepted Answer

Calculate the marginal consequences of moving between alternatives and choose the one where the marginal benefit equals the marginal cost.

Question 10

In game theory, what is the main characteristic of a Nash equilibrium?

Accepted Answer

No player can improve their payoff by unilaterally changing their strategy.

Question 11

Which of the following is NOT a real-life example of a zero-sum game?

Accepted Answer

International trade agreements

Question 12

Suppose the marginal benefit of an action is $ MB = 10 $ and the marginal cost is $ MC = 8 $. According to marginal analysis, what should you do?

Accepted Answer

Take the action, because $ MB > MC $

Question 13

Which of the following statements about zero-sum games is correct?

Accepted Answer

Zero-sum games negate the possibility of mutual gains from trade.

Question 14

In the context of game theory, which of the following is an example of a multi-person decision problem where payoffs are interdependent?

Accepted Answer

Negotiating a trade agreement between countries

Question 15

If a player’s strategy is a best response to the equilibrium strategies of other players, what concept does this describe?

Accepted Answer

Nash equilibrium

Question 16

A student is deciding between three alternatives: A, B, and C. The marginal benefit of moving from A to B is $ 5 $, and the marginal cost is $ 3 $. The marginal benefit of moving from B to C is $ 2 $, and the marginal cost is $ 4 $. According to marginal analysis, what should the student do?

Accepted Answer

Move from A to B, but not from B to C.

Question 17

Which of the following is a step in optimization using total value?

Accepted Answer

Translate all costs and benefits into common units.

Question 18

In a Nash equilibrium, what is true about each player's strategy?

Accepted Answer

It is a best response to the strategies of the other players.

Question 19

Which of the following is a correct application of marginal analysis in a real-world scenario?

Accepted Answer

A company decides to produce more units as long as the marginal revenue exceeds the marginal cost.

Question 20

Which of the following best describes the process of formalizing a game in game theory?

Accepted Answer

Identifying the players, their strategies, and the payoffs for each possible outcome.

Optimization and Game Theory in Microeconomics: Study Notes

Study Guide - Practice Questions

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