Two countries that specialize their production along the lines of comparative advantage and then trade with each other will be able to
A. both produce and consume more.
B. produce less and consume more.
C. produce more and consume less.
D. both produce and consume less.
Answer: A
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Perhaps the most compelling argument against the redistribution of income is that __________.
a. it does not work b. it is unfair c. we cannot afford it
Inga's graph of her budget line has apples per week on the vertical axis and loaves of bread per week on the horizontal. A fall in the price of an apple shifts the
A) horizontal intercept leftward. B) horizontal intercept rightward. C) vertical intercept downward. D) vertical intercept upward.
Suppose that Country A has an absolute advantage over Country B in the production of both wheat and cloth. The opportunity cost of 1 unit of wheat is 2 units of cloth in Country A and 3 units of cloth in Country B. It follows that production of both wheat and cloth will be maximized if
a. Country A specializes in cloth. b. Country A specializes in wheat. c. Country A produces both goods. d. both countries produce both goods.
Using Figure 4.2, suppose point C represents the optimal mix of public and private goods for a society. The market mechanism is likely to result in a mix of output represented by point
A. B because the market mechanism tends to overproduce public goods. B. F because the market mechanism is inefficient. C. D because the market mechanism tends to underproduce public goods. D. C because the market mechanism is efficient.