Suppose that the United States has an absolute advantage over Mexico in producing both agricultural and manufactured goods. In the U. S., the opportunity cost of 1 unit of agricultural output is 2 units of manufactured goods. In Mexico, the opportunity cost of 1 unit of agricultural output is 1.5 units of manufactured goods. Total production in the U. S. and Mexico will be maximized if
a. the U. S. specializes in both types of output
b. Mexico specializes in both types of output
c. the U. S. specializes in agricultural goods and Mexico specializes in manufactured goods
d. the U. S. specializes in manufactured goods and Mexico specializes in agricultural goods
e. each country achieves self-sufficiency
D
You might also like to view...
Which of the following increases frictional and/or structural unemployment?
i. more young workers entering the labor force ii. more generous unemployment benefits iii. a structural slump with some industries dying A) iii only B) i and ii C) ii only D) i, ii. and iii E) i only
In states where the government runs liquor stores, the monopoly results from
A) economies of scale. B) legal restrictions. C) control of an essential resource. D) patents. E) public fear.
Price floors, such as government price support programs, _____
a. decrease consumption b. increase production c. decrease production d. a and b e. a and c
Time is primarily a __________ that can be measured in units
a. Value b. Goal c. Resource d. Decision device