In this blog you will find the correct answer of the Coursera quiz Competitive Strategy Coursera week 2 Quiz mixsaver always try to bring the best blogs and best coupon codes
1. Through which mechanisms can cooperation between companies be achieved?
- Entry deterrence
- Repeated games
2.Have a look at the game matrix below. Could some kind of cooperation improve the outcome of this game?
3.Imagine a price setting game like in the game matrix below.
Which of the following statements is true?
- The two companies are suffering from a Prisoner’s Dilemma.
- Both companies set a low price because this is the best outcome for both of them.
- It would be best for both companies if they could commit to an outcome where one firm chooses a high price and the other firm chooses a low price.
- Both companies cannot coordinate on one Nash Equilibrium.
Practice Quiz: Finite Repetition
1. Which of the following statements is true?
- Repeated games are the only way to achieve cooperative behavior.
- In finite games it is clear from the beginning how often the game is repeated and when it ends.
- In repeated games interactions between competitors always take place in endless patterns.
- Backward induction is used to analyze repeated games with infinite repetitions.
2. If the outcome of a game is determined by the fact that in the last stage of the game there is no further threat of retaliation, this is called ___________ effect.
- first- mover
3. Imagine SausageKing and Hotdog-Master run hot dog stalls at the stadium of the football world championships. Both stalls exactly know that they can only sell sausages during the five weeks of the championships. After that, they have to leave the site. Mondays at 8am, they can set their prices for the coming week. The possible actions and related payoffs are as follows:
What prices will the two stalls set on the first Monday of the championships?
- SausageKing sets a Low Price and Hotdog-Master sets a High Price.
- Both set a Low Price.
- Hotdog-Master sets a Low Price and SausageKing sets a High Price.
- Both set a High Price.
4. Which of these statements are true for a game with finite repetitions?
- The players do not play a dominant strategy.
- The outcome is always the same as for a game with infinite repetitions.
- There is no endgame effect.
- In each period of the game, the equilibrium outcome is the same.
- Honor Code Agreement
Practice Quiz: Infinite Repetition
1. Which of the following factors enhance cooperation?
- The customers are heterogeneous in their preferences.
- The punishment for incorporative behavior is small.
- The number of competitors is small.
- Future payoffs are highly valued.
2. Let’s assume Saudi Arabia and Venezuela control the market for oil. Each country has enough resources and production capacity to supply the whole demand in the market. At the end of each year, the countries decide simultaneously about the prices they will charge in the following year. With probability p, the countries stay in the market and the game goes on.
If both countries charge the monopoly price the market is shared equally and the overall profit is 80mn USD. If one country charges a slightly lower price, it will serve the whole market and make profits of 60mn USD. If both countries charge a low price this will end in fierce competition and both countries will make zero profits.
The companies agreed on charging monopoly prices and punish deviation with setting a low price for all future periods.
Cooperation is achieved if…
3.Assume that there are two skis manufacturers. Every year at Christmas, they think about launching an advertising campaign. Because both companies have been in the market for quite a while and intend to stay in the market, this can be treated as a game with infinite repetitions. The possible actions of the companies and the related payoffs are as follows:
What could be a good strategy to sustain cooperation in the market?
- Flip a coin and advertise accordingly.
- Don’t advertise as long as the other manufacturer doesn’t advertise. If the other manufacturer advertises once, advertise in all future Christmas seasons.
- Choose always the action that the other company wasn’t doing in the previous period.
- Advertise at each Christmas season, no matter what the other manufacturer is doing.
4. Sweet Retreat and Flour & Faith sell cupcakes around the main university building in Los Angeles. One day, the two owners meet in secret and agree to coordinate their prices.
Their cupcake price cartel is more stable if…
- …more cupcake stores open in the area.
- …the banks charge less for credits.
- …more students buy cupcakes.
- …the price for flour and other ingredients goes down.
Practice Quiz: Commitment
1. Which of the following statements are correct?
- A most favored customer clause means that a company promises its customers that they will get refunded if another customer is charged a lower price in the future.
- Reputation building is a form of cooperative commitment.
- Self-binding commitment is a form of aggressive commitment.
- With a most favored customer clause in place, it is very costly for the companies to compete for a specific group of customers with heavy price cuts.
- Reputation building makes it more costly for companies to compete for certain customers through price cuts.
2. Enerflow and PowerCoal are manufacturers of coal-fired power stations and serve the European and Asian market. Both companies think about starting an R&D project to develop a more efficient and environmental friendly power turbine. There is not enough demand for two competing technologies of this kind in the market.
The payoff structure is as follows:
How many Nash Equilibria exist in this game?
3.Imagine now that Enerflow builds a new research and production facility specifically for this new power turbine technology. The facility cannot be used for other purposes.
What kind of strategy is Enerflow following?
- Aggressive commitment strategy
- Soft commitment strategy
- Sustainable research strategy
- Tit-for-tat strategy
4. Cooperative commitment… (check all that apply)
- … indicates the welfare of a society.
- … is about building a reputation as a unselfish player.
- … changes a simultaneous game into a sequential game.
- … often makes it difficult for companies to start a price war over a specific group of customers.
Quiz: Why Firms Work Together
1. In which type of games can an endgame effect occur?
- Games with finite repetitions
- Games with infinite repetitions
2. Reputation building is a type of a(n)…
- Most favoured customer clause
- Soft commitment
- Aggressive commitment
- Self-binding commitment
3. Imagine Airbus and Boeing both think about launching a new large-scale passenger airplane. The payoffs are stated in the matrix below.
If Boeing plays aggressive commitment what will be the outcome of the game?
- Boeing launches the 747X, Airbus does not launch the A380
- Boeing lauchnes the 747X, Airbus launches the A380
- Boeing does not launch the 747X, Airbus launches the A380
- Boeing does not launch the 747X, Airbus does not launch the A380
4.City Cuts and Toby’s Hairstyle compete on prices in one season. The possible actions and the corresponding payoffs are reported in the matrix below.
Imagine now that they both know that they will repeat the price setting every season. It is not clear from now how many season are there to come.
How will this change the outcome of the game?
- Higher payoffs for City Cuts
- Higher payoffs for both due to cooperation
- Lower payoffs for both due to deviation
- Higher payoffs for Toby’s Hairstyle
- No change
5. Imagine that Singapore Airlines and Delta Airlines are the only two airlines that serve the route New York City – Singapore.
At the beginning of each season, they decide whether to set the monopoly price (cooperate) or a lower price (deviate). The probability that there will be a next season is p.
The payoffs for each season are stated in the matrix below.
For what range of values of p do the two rational airlines cooperate?.
- Between 0 and .5
- Between .25 and .75
- Between 0.25 and 1
- Between .5 and 1
6. Imagine a prisoners’ dilemma type of game with infinite repetitions. Which of the following factors enhance cooperation in this game?
- High importance of future payoffs
- Low degree of punishment
- Great happiness of consumers
- Large number of competitors
- High number of employees
7. Imagine that AT&T and Verizon are the only two operators that offer mobile telephony services in New York.
Once every month, they decide whether to set the monopoly price (cooperate) or a lower price (deviate). The probability that they will still be in the market in the next month is p = 0.5.
The payoffs for each season are stated in the matrix below.
What is a possible value for the monopoly profits M so that the two rational companies will cooperate.
- M = 60 or greater
- M = 120 or greater
- M = 80 or greater
- M = 100 or greater
8.Imagine a prisoners’ dilemma type of game with infinite repetitions. Compare a situation with high interest rates to a situation with low interest rates.
In which of these situations is it more likely that the players will cooperate?
- Situation with high interest rates
- Situation with low interest rates
9.What might be possible effects of implementing a most favoured customer clause?
- It increases competition
- It makes future customers buy earlier
- It lowers competition
- It increases the customer’s willingness to pay
- It provides buyers with a lifetime guarantee
- It makes people collect bonus points
10. Imagine that the Summer Olympics 2016 last for two weeks. There are two burger stalls on site. They can set prices twice – once at the beginning of each week.
Their possible actions and the corresponding payoffs for each subgame are reported in the following matrix. They can either cooperate (set high prices) or deviate (set low prices).
What is the outcome of this repeated game assuming that the players act rationally?
- Cooperation in first period – No cooperation in second period
- Cooperation in first period – Cooperation in second period
- No cooperation in first period – No cooperation in second period
- No cooperation in first period – Cooperation in second period
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