Constant returns to scale means that long-run:
A. ATC does not change as output increases.
B. ATC rises and then falls as output increases.
C. ATC decreases as output decreases.
D. ATC increases as output increases.
Answer: A
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What will be an ideal response?
If the risk of holding assets in foreign countries rises relative to the risk of holding U.S assets, then
a. U.S. net capital outflow rises which increases the U.S. exchange rate. b. U.S. net capital outflow rises which decreases the U.S. exchange rate. c. U.S. net capital outflow falls which increases the U.S. exchange rate. d. U.S. net capital outflow falls which decreases the U.S. exchange rate.
If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B:
A. mutually advantageous specialization and trade between A and B may still be possible. B. we can conclude that A is an industrially advanced economy and B is a developing economy. C. it will necessarily be advantageous for B to import both X and Y from A. D. then there is no possible basis for mutually advantageous specialization and trade between A and B.
The United States imports televisions from Japan and Japan imports computer chips from the United States. If the theory of comparative advantage guides trade between the two countries, it must be true that
A. the United States has comparative advantage in producing televisions. B. the United States has comparative advantage in producing computer chips. C. the opportunity cost of producing televisions in Japan is higher than that in the United States. D. the opportunity cost of producing computer chips in the United States is higher than that in Japan.