If Daniel produces one pair of shoes in 4 hours and Sarah produces one pair of shoes in 3 hours, then
a. Sarah has a comparative advantage in shoemaking
b. Daniel has a comparative advantage in shoemaking
c. Sarah has an absolute and a comparative advantage in shoemaking
d. Daniel has an absolute and a comparative advantage in shoemaking
e. Sarah has an absolute advantage in shoemaking
E
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The above figure shows the U.S. market for replacement cell phone batteries. Area E is the
A) producer surplus when there is free trade. B) deadweight loss from tariff. C) tariff revenue. D) increase in producer surplus due to the tariff. E) gain in total surplus due to the tariff.
Game theory is most useful for determining the outcome when ________
A) the market structure is oligopoly B) monopolistic competition exists C) prison terms are involved D) the market is dominated by a monopoly
Assume that both the demand curve and the supply curve for MP3 players shift to the right but the supply curve shifts more than the demand curve. As a result
A) the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease. B) the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease. C) the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase. D) both the equilibrium price and quantity of MP3 players will decrease.
According to the rational expectations theory, expansionary monetary policy is fully effective only if
a. the policy is anticipated by workers and firms. b. aggregate supply shifts to the left. c. the economy is operating at or above its potential output level. d. policy makers follow through on their previously announced plans. e. the effects of the policy are unexpected.