No sound on Skype

Have recently purchased a new MacBook PRo 13" and when I try to Skype I can see my contact, they can hear me, they can see me, but I can't hear them. The sound is not quiet - it's off altogether. I checked the mute button on SKype - it's not that. HAve checked my sound settings in Mac preferences and it is set to internal speakers and volume is ok. Have sound with other applications.

ANy ideas?