1. On p. 97 North writes: "Cooperation is difficult to sustain when the game is not repeated (or there is an endgame), when information on the other players is lacking, and when there are large numbers of players." For each of these three, concisely describe why this is the case. (Note that this question is worth 6 points instead of the usual 3 points.) 2. In describing the transition from local trade within a village or between nearby villages to long distance trade, North writes on p.99: "The development of long-distance trade, perhaps through caravans or lengthy ship voyages, requires a sharp break in the characteristics of an economic structure." According to North what is the key difference between a society in which people are engaged only in local trade and a society in which people are also engaged in long-distance trade--the "sharp break" in characteristics? According to North, how is this related to the concept of "economies of scale"? 3. On pp. 99-100 North describes "two distinct transaction cost problems" that long distance trade entails: agency problems and contract enforcement. What is the difference between these two? 4. On p. 101 North writes: "The technology associated with the growth of manufacturing ... required effective factor and product markets." He then goes on to write: "Undergirding such markets are secure property rights." Describe in more detail why property rights are important to "effective factor and product markets," and why this is contrasted with the case of "local exchange within the village" described on p. 99. In other words, why are secure property rights more important for the growth of manufacturing than they are for an economy characterized by local production and exchange within one village? 5. Pundits often decry the fact that the percentage of the American labor force employed in manufacturing has been falling for the past several decades. Using this article as a guide, explain how North would respond to this. 6. According to North, why do "inefficient" forms of bargaining continue in the Suq? Why don't the institutions of the Suq evolve to resemble those of the more productive modern capitalist societies? 7. In the 1800s, as countries in Latin America fought for and won independence from European colonial powers, they adopted constitutions that closely resembled the US Constitution. With such similar political structures, why did the US experience sustained economic growth, while most Latin American countries experienced only erratic economic growth, and political and economic instability? Concisely describe North's argument.