Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The workers in Country A should specialize in ________ because they possess the ________ in the production of that good.
A. bananas; comparative advantage
B. tomatoes; absolute advantage
C. tomatoes; comparative advantage
D. bananas; absolute advantage
Answer: A
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In the above figure, a sales tax of $1 per unit imposed on sellers ________ the price buyers pay and ________ the price that suppliers keep for themselves
A) affects; does not affect B) does not affect; affects C) does not affect; does not affect D) affects; affects
Government expenditures includes all of the following except
A) federal defense spending. B) federal nondefense spending. C) state and local spending. D) transfers.
If people specialize in producing those goods for which they possess a comparative advantage, then the economy as a whole can produce a greater quantity of goods
a. True b. False
During the Great Depression of the 1930s, the unemployment rate in the United States peaked at around
a. 5 percent b. 10 percent c. 12 percent d. 25 percent e. 50 percent