1. If a monopolist is producing the quantity at which price equals marginal cost, it should
a. continue to produce this amount if it wants to maximize profits.
b. reduce output if it wants to maximize profits.
c. reduce price and keep output unchanged if it wants to maximize profits.
d. increase output if it wants to maximize profits.
2. Three friends are considering whether to attend a match or staying at their respective homes. Each of the three would prefers to attend the match if the other two also attend (each gets a payoff of, say, 2 from this). However, if the other two are not both there, each would rather stay home: each obtains a payoff of 0 from the match and 1from staying home. (Of course, telecommunications do not work in the city.) This game
1. has no Nash equilibrium (in pure strategies)
2. has only one Nash equilibrium: all three friends attend the match.
3. has only one Nash equilibrium: all three friends stay home.
4. has two Nash equilibria (in pure strategies): all three attend the match or none of them does.
5. is an example of the prisonner's dilemma.