1. Cooperation between the two prisoners in the prisoners’ dilemma game is difficult to maintain, because
A. the prisoners are questioned separately.
B. criminals know they can’t trust one another.
C. choosing the dominant strategy is individually rational.
D. cooperation is individually rational
2. Assuming competitive markets, a worker’s contribution to revenue is given by the
A. production function.
B. marginal product minus the marginal cost.
C. value of the marginal cost of labor.
D. value of the marginal product of labor.
3. The business-stealing externality associated with monopolistic competition arises because in monopolistically competitive markets, firms
A. always charge a price higher than marginal cost.
B. produce differentiated products.
C. are few barriers to entry.
D. produce at less than efficient scale.
4. Which of the following statements is correct?
A. If wages fall, profit-maximizing firms in competitive markets will increase employment, and the marginal product of labor will fall.
B. If wages fall, profit-maximizing firms in competitive markets will increase employment, and the marginal product of labor will rise.
C. If wages fall, profit-maximizing firms in competitive markets will decrease employment, and the marginal product of labor will rise.
D. If wages fall, profit-maximizing firms in competitive markets will decrease employment, and the marginal product of labor will fall.
5. Which of the following statements is correct?
A. As the number of firms in an oligopoly increases, the oligopoly becomes more like a duopoly.
B. As the number of firms in an oligopoly increases, the oligopoly becomes more like a monopoly.
C. As the number of firms in an oligopoly increases, the oligopoly becomes more competitive.
D. As the number of firms in an oligopoly decreases, the oligopoly becomes more competitive.