G202 EXAM 2 CERTIFICATION EVALUATION
EXAMS 2026 QUESTIONS WITH PRACTICE
SOLUTION GRADED A+
◉ What is a Dominant Strategy? Answer: A strategy that is the best
choice for a player regardless of what the opponent does.
◉ What is a Secure Strategy? Answer: A strategy that avoids the
worst possible payoff
◉ What is Nash Equilibrium? Answer: A set of strategies where
neither player has regrets about their choice, given the other
player's choice.
◉ What is the incentive to cheat in the Diamond Dilemma? Answer:
If both play Low Q, one player may switch to High Q to increase
profits, risking the collusion.
◉ What is the role of the DeBeers Diamond Cartel? Answer: To
collude and restrict diamond quantities
◉ What is a Mixed Strategy? Answer: A randomized strategy that
prevents rivals from predicting a player's actions.
,◉ What is the significance of Sequential Moves in Game Theory?
Answer: Players make decisions in turns, affecting subsequent
choices and outcomes.
◉ What does Strategic Sustainability involve? Answer: Incorporating
sustainable practices to improve profits and manage risks.
◉ What are some profit drivers of Strategic Sustainability? Answer:
Cost reductions, managing regulatory risks, enhancing brand equity,
and attracting investors.
◉ What are some incentive mechanisms to promote green practices?
Answer: Government taxation, accountability for waste, and tradable
pollution permits.
◉ What does a polluting firm typically ignore? Answer: Its external
costs (MEC) when maximizing profits.
◉ How can a carbon tax internalize external costs? Answer: By
increasing the private cost of firms, reflecting the societal cost of
carbon emissions.
◉ What is the optimal size of a carbon tax? Answer: It should be set
to reflect the true cost of carbon emissions to society.
, ◉ What is the formula for calculating tax in relation to marginal
cost? Answer: Tax = MEC @ Qe; MEC = MSC - MPC
◉ Why do economists favor carbon taxes? Answer: Because the
revenue can be used to subsidize green investments, especially for
communities impacted by climate change.
◉ What are two burdens that carbon taxes place on polluting firms?
Answer: Decreased sales volume (Qe < Qf) and decreased margin
per sale.
◉ How can assigning accountability for a firm's waste alleviate
external damages? Answer: It can lead to the evolution of secondary
markets for waste products.
◉ What are some examples of subsidies that governments can offer
to encourage green technology investments? Answer: Tax credits for
green investments, grant money for green R&D, and government-
industry partnerships.
◉ What role do Green NGOs play in promoting green technology?
Answer: They can partner with industry to collaborate on green
technology and certifications or use negative PR campaigns to force
adoption.
EXAMS 2026 QUESTIONS WITH PRACTICE
SOLUTION GRADED A+
◉ What is a Dominant Strategy? Answer: A strategy that is the best
choice for a player regardless of what the opponent does.
◉ What is a Secure Strategy? Answer: A strategy that avoids the
worst possible payoff
◉ What is Nash Equilibrium? Answer: A set of strategies where
neither player has regrets about their choice, given the other
player's choice.
◉ What is the incentive to cheat in the Diamond Dilemma? Answer:
If both play Low Q, one player may switch to High Q to increase
profits, risking the collusion.
◉ What is the role of the DeBeers Diamond Cartel? Answer: To
collude and restrict diamond quantities
◉ What is a Mixed Strategy? Answer: A randomized strategy that
prevents rivals from predicting a player's actions.
,◉ What is the significance of Sequential Moves in Game Theory?
Answer: Players make decisions in turns, affecting subsequent
choices and outcomes.
◉ What does Strategic Sustainability involve? Answer: Incorporating
sustainable practices to improve profits and manage risks.
◉ What are some profit drivers of Strategic Sustainability? Answer:
Cost reductions, managing regulatory risks, enhancing brand equity,
and attracting investors.
◉ What are some incentive mechanisms to promote green practices?
Answer: Government taxation, accountability for waste, and tradable
pollution permits.
◉ What does a polluting firm typically ignore? Answer: Its external
costs (MEC) when maximizing profits.
◉ How can a carbon tax internalize external costs? Answer: By
increasing the private cost of firms, reflecting the societal cost of
carbon emissions.
◉ What is the optimal size of a carbon tax? Answer: It should be set
to reflect the true cost of carbon emissions to society.
, ◉ What is the formula for calculating tax in relation to marginal
cost? Answer: Tax = MEC @ Qe; MEC = MSC - MPC
◉ Why do economists favor carbon taxes? Answer: Because the
revenue can be used to subsidize green investments, especially for
communities impacted by climate change.
◉ What are two burdens that carbon taxes place on polluting firms?
Answer: Decreased sales volume (Qe < Qf) and decreased margin
per sale.
◉ How can assigning accountability for a firm's waste alleviate
external damages? Answer: It can lead to the evolution of secondary
markets for waste products.
◉ What are some examples of subsidies that governments can offer
to encourage green technology investments? Answer: Tax credits for
green investments, grant money for green R&D, and government-
industry partnerships.
◉ What role do Green NGOs play in promoting green technology?
Answer: They can partner with industry to collaborate on green
technology and certifications or use negative PR campaigns to force
adoption.
