Which of the following statements is FALSE?
A) Comparative advantage is the principle upon which trade patterns are based.
B) Opportunity cost measures the real cost to a country of producing a certain product.
C) The gains from trade are the result of differences in opportunity cost and comparative advantage.
D) A country that possesses an absolute advantage will always have a comparative advantage.
E) Comparative advantage is necessary and sufficient for trade.
D
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The natural rate of unemployment occurs if there is no:
a. unemployment. b. frictional unemployment. c. structural unemployment. d. cyclical unemployment.
Adam Smith believed that monopoly is the most efficient market structure.
Answer the following statement true (T) or false (F)
Suppose that Lady Gaga sells 1,000 tickets to a concerts at $480 each. If the equilibrium price is $600 per ticket for a fixed supply of 1,000 tickets, what is the value of the additional economic rent that Lady Gaga could earn if she charged the market clearing price?
A. $480,000 B. $1,080,000 C. $600,000 D. $120,000
If a firm wants to maximize profits it should
A. hire lots of capital and very little labor since labor needs to be trained. B. equate the marginal revenue product for each input to the price of the input. C. equate the marginal product for each input to the price of the input. D. hire unskilled labor rather than skilled labor since unskilled labor is cheaper.