Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The workers in Country B will benefit from trade if they:
A. specialize in bananas because they have a comparative advantage in banana production.
B. specialize in tomatoes because their opportunity cost of tomatoes is higher than Country A's.
C. specialize in tomatoes because their opportunity cost of tomatoes is lower than Country A's.
D. specialize in bananas because they have an absolute advantage in banana production.
C. specialize in tomatoes because their opportunity cost of tomatoes is lower than Country A's.
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Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
A hypothetical open economy has a marginal propensity to import (MPI) equal to 0.2 and a marginal propensity to consume equal to 0.7 . Assume that the economy is initially in equilibrium. What will happen to the equilibrium real GDP if a tourist visits the country and spends $100 that she brought with her?
a. It will not change. b. It will increase by $100. c. It will increase by $200. d. It will increase by $143. e. It will increase by $90.
Use the information in the table below.Percentage of salesIndustry 1Industry 2Industry 3Industry 4Firm 155%45%25%10%Firm 210%35%40%60%Firm 325%20%35%10%Firm 410% 20%Which of the following industries is the most concentrated based on the Herfindahl index?
A. Industry 1 B. Industry 2 C. Industry 3 D. Industry 4
One factor that contributed to the growth in the share of population employed in the United States between 1960 and 2000 was increased:
A. female labor force participation. B. labor union participation. C. male labor force participation. D. minimum wages.