Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Mike should specialize in producing
A. cars.
B. neither cheese nor cars.
C. both cheese and cars.
D. cheese.
Answer: D
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The most direct way in which money replaces barter is through its use as a
A) medium of exchange. B) recording device. C) store of value. D) unit of account.
As of the end of 1994 the country in our survey with the smallest stock market in dollar terms was
A) the United States. B) the United Kingdom. C) Japan. D) Germany.
Open market purchases of bonds by the Federal Reserve eventually
a. reduce the pressures on bond markets b. increase real GDP c. lead to open market sales of bonds d. increase the interest rate e. encourage tax increases
If a firm is earning a positive economic profit, it means that it:
A. should invest its resources in other business opportunities. B. has an opportunity cost that is larger than what the firm is currently earning. C. operating in the long run in a perfectly competitive market. D. is using its resources in the most profitable way.