AP Microeconomics : Positive Externalities Graphs

Study concepts, example questions & explanations for AP Microeconomics

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Example Questions

Example Question #1 : Positive Externalities Graphs

In a game with two or more players, a dominant strategy refers to a strategy that _________.

Possible Answers:

never results in a Nash equilibrium.

results in a larger payoff than any other strategy regardless of the strategies chosen by any other players.

results in a smaller payoff than any other strategy except when another player has a dominant strategy as well.

results in a larger payoff than any other strategy except when another player has a dominant strategy as well.

results in a smaller payoff than any other strategy regardless of the strategies chosen by any other players.

Correct answer:

results in a larger payoff than any other strategy regardless of the strategies chosen by any other players.

Explanation:

The definition of a dominant strategy is one that leads to the highest payoff for a particular player, regardless of what other players do.

Nash equilibrium can be achieved as the result of playing a dominant strategy, eliminating answer choice "never results in Nash equilibrium".

 

 

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