Explain what is meant by the economic principle of voluntary exchange
What will be an ideal response?
If two people both produce goods and each has a comparative advantage, and they exchange goods with each other for mutual benefit, it is called a voluntary exchange.
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Microeconomics deals with the analysis of all the following questions except how:
a. the wages of carpenters are determined. b. high did unemployment rise during the Great Depression. c. does Ford decide how to price its cars. d. does a college student decide how to spend her income. e. do monopolies and competitive markets differ.
If a country has a lower opportunity cost in producing a good than its trading partners, then it has:
A. A comparative advantage in producing the good. B. Favorable terms of trade in producing the good. C. An absolute advantage in producing the good. D. Lower labor costs in producing the good.
Refer to Scenario 7.8 below to answer the question(s) that follow. SCENARIO 7.8: A swimming pool cleaning company has the following production possibilities. With one, two, three, and four workers, the company can clean 5, 12, 17, and 20 pools per day, respectively. Refer to Scenario 7.8. Diminishing returns to labor set in with the ________ worker.
A. first B. second C. third D. fourth
Purchasing power parity holds when the exchange rate is equal to the product of the foreign price level and the domestic price level
a. True b. False Indicate whether the statement is true or false