A perfectly competitive firm faces a market price of $5. At its current production level, its MC = 5, AC = $7 and AVC = $6. The firm should...

a.

Decrease production.

b.

Maintain production.

c.

Shut down.

d.

Increase production.

In a tennis match, one player decides to take performance enhancing drugs regardless of what her opponent intends to do. This is called...

a.

A Nash equilibrium.

b.

A dominant strategy.

c.

The prisoners' dilemma.

d.

Collusion.

The law of supply says that the relationship between the price of a product and the quantity produced is...

a.

Fair.

b.

Profitable.

c.

Positive.

d.

Negative.