Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Which of the following statements is true? Bangladesh should:
A. specialize in glove production since it possesses the comparative advantage in glove production.
B. despecialize in radish production since it possesses the comparative advantage in radish production.
C. produceboth gloves and radishes since it has the absolute advantage in glove production.
D. only produce radishes since it has the absolute advantage in radish production.
A. specialize in glove production since it possesses the comparative advantage in glove production.
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Refer to the payoff matrix. Suppose that Speedy Bike and Power Bike are the only two bicycle manufacturing firms serving the market. Both can choose large or small advertising budgets. Is there a Nash equilibrium solution to this game?
A. There is no possible Nash equilibrium solution.
B. A Nash equilibrium can occur at either cell B or cell C.
C. Cell A represents a Nash equilibrium.
D. Cell D represents a Nash equilibrium.
A new file cabinet will generate $300 in net revenue each year for a Data Storage Co The file cabinet has a useful life of two years. At the end of the second year, the cabinet will be sold as scrap metal for $200 . If the interest rate is 10 percent (0.10) per year, what is the present value of the file cabinet to Data Storage Co? (Assume that each year's revenue is received at the end of the
year.) a. $500 b. $600 c. $800 d. $1,000 e. none of the above
Suppose a change in technology increases the marginal product of labor. The result is
a. a downward movement along the demand for labor curve. b. a rightward shift in the demand for labor curve. c. a leftward shift in the demand for labor curve. d. an upward movement along the demand for labor curve.
An example of a government policy to provide a framework within which the private sector can operate productively is:
A. the taxation of savings. B. government ownership of capital. C. the suppression of political dissent. D. maintaining a well-functioning legal system.