1.10 Suppose Jordan and Lee are trying to decide what to do on a Friday. Jordan would prefer to see a comedy while Lee would prefer to see a documentary. One documentary and one comedy are showing at the local cinema. The payoffs they receive from seeing the films either together or separately are shown in the accompanying payoff matrix. Both Jordan and Lee know the information contained in the payoff matrix. They purchase their tickets simultaneously, ignorant of the other's choice. Which of the following statements is true? Page 4 of 13 Comedy Documentary Comedy 0 for Lee 1 or Lee Lee 7 for Jordan 8 for Jordan Documentary 2 for Lee 9 or Lee 3 for Jordan 4 for Jordan A. Both the upper-right and lower-left cells are Nash equilibria B. Both the upper-left and lower-right cells are Nash equilibria C. The upper-left cell is the only Nash equilibrium D. The lower-right cell is the only Nash equilibrium 1.11 Consider Fire Pizza and the Moonlight Cafe are located next door to each other. If Fire Pizza opens a drive-through window, the increased traffic and noise will bother customers seated outside at the Moonlight Cafe. The table below shows the monthly payoffs to Fire Pizza and the Moonlight Cafe when Fire Pizza does and does not operate a drive-through window. Suppose Fire Pizza has the legal right to operate a drive-through window, then the Moonlight Cafe would be willing to pay Fire Pizza at least per month to NOT operate a drive-through window. Fire Pizza Operates a Fire Pizza Does Not Drive-Through Window Operate Drive-Through Window Fire Pizza $ 24,000 $ 15,000 The Moonlight Cafe $ 13,000 $ 23,000 A. $9,000 B. $2,000 chilemelee evilagon a D. $15,000 1.12 The table below shows the marginal benefit and marginal cost of purchasing an additional unit of 3 different public goods. Total economic surplus could be increased by reallocating total spending away from Marginal benefit Marginal cost Total spending on the public good Public good 1 $ 20 $ 20 $ 1,500 15 25 800 Public good 2 10 5 700 Public good 3 A. public good 3 toward public good 1 B. public good 2 toward public good 3 C. public good 2 toward public good 1 D. public good I toward public good 3