Consider a two-country, two-commodity model. The table below shows the units of Good X and Good Y produced in Country A and Country B per labor hour. If Country A transfers one labor hour from the production of Good Y to the production of Good X, total world production of Good X will ________ by ________ unit(s). ProductivityCountry ACountry BGood X1.000.50Good Y0.200.70
A. decrease; 0.7
B. increase; 0.5
C. increase; one
D. decrease; 1.43
Answer: C
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Which of the following undermines the effectiveness of a barrier to entry?
a. the existence of patents in the industry b. high fixed cost c. no access to resources d. product differentiation e. rapid technological innovation
The Bretton Woods agreements in 1944
a. established the International Monetary Fund. b. sanctioned world trade on the gold-exchange system. c. allowed nations to devalue their currencies under certain conditions. d. All of the above are correct.
A firm earns a normal profit when its:
A. economic profit is zero. B. accounting profit is positive. C. economic profit is positive. D. accounting profit is zero.
Refer to the above figure. Suppose that the economy was originally at point A, and then it reached point C by means of a fiscal policy action. Which of the following is correct?
A. Point C is a short-run equilibrium that could have been attained through a reduction in government spending, but in the long run the economy will end up at point B. B. Point C is both a short-run equilibrium and a long-run equilibrium that could have been attained through an increase in government spending. C. Point C is a long-run equilibrium that could have been attained through a tax increase, although reaching this point first required a short-run equilibrium at point B. D. Point C is a short-run equilibrium that could have been attained through a tax cut, but in the long run the economy will end up at point B.