Question

1. Which one of the following was NOT discussed in the text as a main contributor to variations in labor productivity?

a. The efficiency with which workers apply their skills.

b. The skills of the worker.

c. The level of effort with which workers work.

d. The opportunity cost workers face for paid labor.

e. The quantity and characteristics of the resources available to each worker.

2. Advertising and firm location are examples of tacit collusion.

True or False

3. In the “prisoner’s dilemma” duopoly game, if each firm chooses the price level that is most profitable no matter what the other company does, then

a. the companies can end up colluding, pricing high to keep profits up.

b. the companies end up pricing low, leading to very low profits.

c. one company can gain large profits while the other suffers from low profits.

d. There is no clear result.

e. None of the above.

4.  A prisoner’s dilemma describes a situation when acting in one’s own self-interest leaves everyone worse off.

True/False

Answer 1

1. The opportunity cost workers face for paid labor is not a main contributor to variation in labor productivity.

Answer: option D

2. Advertising and firm location are examples of non price competition, which allows firms to compete against each other without reducing prices.

Answer: False