Sears and Wal-Mart must decide whether to lower their prices, ...

[mydiamond]

Sears and Wal-Mart must decide whether to lower their prices, based on the economic profits shown in the table above. Which of the following is TRUE?
 
  A) This situation is not a prisoners' dilemma.
  B) If Sears lowers its prices and Wal-Mart does not, Sears will make a 20 million economic profit.
  C) If Wal-Mart lowers its prices, Sears should keep its prices high.
  D) Both Sears and Wal-Mart would jointly be better off if they could each keep their prices high.

Question 2

Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. The opportunity cost of producing a unit of X is
 
  A) 1 unit of Y per unit of X for Agnes and 2 units of Y per unit of X for Brenda.
  B) 1 unit of Y per unit of X for Agnes and 1/2 unit of Y per unit of X for Brenda.
  C) 1 hour for Agnes and 1/2 hour for Brenda.
  D) 1 hour for Agnes and 2 hours for Brenda.

[frejo]

Answer to Question 1

D

Answer to Question 2

A