The prisoners' dilemma is a tool of social analysis, and it shows why
A) individuals sometimes behave in ways inconsistent with their own best interest.
B) judges sometimes hand down sentences heavier or lighter than the law recommends.
C) people who break the law and are caught are behaving irrationally.
D) people who break the law and are caught are behaving rationally.
E) societies sometimes produce situations no member of the society wants.
Question 2
Refer to the scenario above. If the government removes the ban on Firm B and both Firm A and firm B aim at maximizing profits:
A) marginal cost of Firm A will eventually be greater than the marginal cost of Firm B.
B) marginal cost of Firm B will eventually be greater than the marginal cost of Firm A.
C) marginal cost of both firms will eventually be equalized.
D) the difference in the marginal cost of both firms will eventually increase.
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