If Country A has an absolute advantage over Country B in the production of every commodity:
A. mutual gains from trade between Country A and Country B would be impossible.
B. Country B would be able to gain from trade but not country A.
C. the joint output of the two countries could not be increased through specialization and exchange.
D. mutual gains from trade would still be possible.
Answer: D
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Suppose that the price level has risen but the government has not collected any seigniorage. Which of the following might have happened?
A. V rose, M and Y were constant. B. Y rose, M and V were constant. C. M rose, Y and V were constant. D. M rose, Y fell, V was constant.
What are the benefits and costs associated with monopolistic competition?
What will be an ideal response?
Suppose the market for grass seed can be expressed as Demand: QD = 100 - 2p Supply: QS = 3p At the market equilibrium, calculate the price elasticities of supply and demand. Use these numbers to predict the change in price resulting from a specific tax
What will be an ideal response?
Refer to the diagram of the market for product X. Curve S t embodies all costs (including externalities) and D t embodies all benefits (including externalities) associated with the production and consumption of X. Assuming the equilibrium output is Q 2 ,
we can conclude that the existence of external:
A. costs has resulted in an overallocation of resources to X.
B. benefits has resulted in an overallocation of resources to X.
C. costs has resulted in an underallocation of resources to X.
D. benefits has resulted in an underallocation of resources to X.