Situation 37-2 Dan and Ann live in the same community and both can participate in two activities, producing and stealing. Refer to Situation 37-2. Both Dan and Ann realize that they are better off producing and not stealing from each other than producing and stealing from each other. They agree not to steal from each other. There is no enforcer of their agreement to not steal. It is likely that
A) Dan and Ann are in a prisoner's dilemma setting.
B) Dan is in a prisoner's dilemma setting but Ann is not.
C) Ann is in a prisoner's dilemma setting but Dan is not.
D) neither Dan nor Ann is in a prisoner's dilemma setting.
A
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A firm pays $50,000 for a machine that is used in production for one year, after which it is sold for $40,000 to another firm. The $10,000 difference is
A) an explicit cost of production. B) economic depreciation, an implicit cost of production. C) normal profit. D) not counted as an economic cost of production. E) not an opportunity cost because it is not actually paid.
When a nation has a comparative advantage in the production of a particular good
A) the nation tends to avoid specialization. B) the comparative advantage encourages self-sufficiency. C) the opportunity cost of producing that good is higher than that of other goods. D) the nation can gain from trade.