In a tennis match, one player decides to take performance enhancing drugs regardless of what her opponent intends to do. This is called...

a.

The prisoners' dilemma.

b.

A dominant strategy.

c.

Collusion.

d.

A Nash equilibrium.

Imperfectly competitive firms sell differentiated products to differing degrees. For that reason, they often...

a.

Discriminate.

b.

Merge.

c.

Collude.

d.

Advertise.

If trade is based exclusively on comparative advantage, the more different countries are...

a.

The greater the potential gains from trade.

b.

The more difficult it is to find gains from trade.

c.

The more likely they will avoid trade with each other because of their differences.

d.

The smaller the potential gains from trade.

Country A needs one input to produce an iced capp and two inputs to produce a doughnut. Country B needs two inputs to produce an iced capp and three inputs to produce a doughnut. Which of the following statements is incorrect.

a.

Country A has an absolute advantage in doughnuts.

b.

Country A has a comparative advantage in iced capps.

c.

Country A has a comparative advantage in doughnuts.

d.

Country B has a comparative advantage in doughnuts.