When people smoke cigarettes, their friends and family members may become sick. This affects GDP by
A. reducing GDP by the amount of medical care needed.
B. reducing GDP by the cost of the cigarettes purchased.
C. increasing GDP by the cost of the medical care and the cost of the cigarettes purchased.
D. decreasing GDP by the cost of the medical care and increasing GDP by the cost of the cigarettes purchased.
Answer: C
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If Carla can pick more oranges in one hour than Benjamin, then Carla definitely has a comparative advantage in picking oranges
Indicate whether the statement is true or false
The theory of purchasing power parity assumes that
A) movements in nominal exchange rates are the result of movements in relative price levels. B) real exchange rates are volatile. C) movements in nominal exchange rates are the result of movements in real exchange rates. D) inflation rates are roughly the same in most countries.
The output effect describes the situation when a monopolist sells more output and, all else equal, total revenue
a. increases. b. decreases. c. is unchanged. d. is maximized.
A clinic uses doctors and nurses optimally and is servicing the maximum number of patients given a limited annual payroll. The last doctor hired treated 1,600 extra patients in a year, while the last nurse hired treated 1,000 extra patients in a year. If doctors make $50,000 a year and nurses make $40,000 a year, then
A. the clinic could serve more patients by hiring more doctors and fewer nurses. B. the clinic is making the correct decision. C. the clinic could serve more patients by hiring fewer doctors and more nurses. D. the clinic is not making the correct decision because the additional patients per dollar spent on doctors is greater than the additional patients per dollar spent on nurses. E. a and d