Each of the following factors might interfere with the efficiency of perfect competition except:
a. increasing returns to scale.
b. imperfect price information.
c. externalities.
d. diminishing returns to scale.
d
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The shape of the production possibilities frontier in Figure 3-1 implies that
A. some resources are better suited for producing wheat than for producing barley. B. the opportunity cost of producing more wheat falls as wheat production rises. C. the farmer’s technology is not subject to the principle of increasing costs. D. the financial cost of producing wheat is higher than the financial cost of producing barley.
All of the following are market determinants of exchange rates EXCEPT
A) changes in productivity in one country relative to another. B) changes in real interest rates in one country relative to another. C) changes in product preferences between countries. D) changes in the relative prices of goods and services within a country.
Suppose Ernie gives up his job as a financial advisor for pets, for which he earned $30,000 per year, to open up a store selling spot remover to Dalmatians. He invested $10,000 of his savings, which had been earning 5 percent interest. This year's revenues in the new business were $50,000 and explicit costs were $10,000 . Calculate Ernie's economic profit
a. $10,000 b. $50,000 c. $20,000 d. $40,000 e. $9,500
The nation of Wheatland forbids international trade. In Wheatland, you can buy 1 pound of corn for 3 pounds of fish. In other countries, you can buy 1 pound of corn for 2 pounds of fish. These facts indicate that
a. Wheatland has a comparative advantage, relative to other countries, in producing corn. b. other countries have a comparative advantage, relative to Wheatland, in producing fish. c. the price of fish in Wheatland exceeds the world price of fish. d. if Wheatland were to allow trade, it would import corn.