Q1) A change in regulations means that fewer factory workers can perform a certain task. New machinery is being offered to factories that can, in some instances, perform the task without workers. Which of the following pairs represents the new wage and new quantity of factory workers?

1) Wage increase, quantity increase

2) Wage increase, indeterminate quantity change

3) Indeterminate wage change, quantity decrease

4) Wage decrease, quantity decrease

Q2) Which of the following is true of two firms in a duopoly market that are in a Nash equilibrium?

1) Both firms are producing at a level that minimizes average total costs

2) Both firms are receiving the maximum payoff available in their payoff matrix

3) Together the firms have chosen a level of supply equal to the level of aggregate demand

4) Neither firm has an incentive to deviate from its strategy