The United States and Canada trade hockey skates and apple pie. If the United States has an absolute and a comparative advantage in the production of apple pie, then:
A. Canada must have the comparative advantage in the production of skates.
B. Canada must have the absolute advantage in the production of skates.
C. Canada must have the absolute and comparative advantage in the production of skates.
D. the United States must also have the comparative advantage in the production of skates.
A. Canada must have the comparative advantage in the production of skates.
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The construct of a representative firm is most helpful in describing the behavior of all of the firms in the economy when
A) there are constant returns to scale. B) there are increasing returns to scale. C) there are decreasing returns to scale. D) the marginal product of labor is increasing in the amount of labor input.
When the government restricts the quantity of a good to zero
A) an underground market develops. B) there is none of the good available anywhere. C) people's demand for the product evaporates. D) producers stop all production.
Accountants and Economists differ in their calculations of profits in that;
a. economists consider sunk costs b. accountants consider implicit costs only c. accountants consider explicit costs only d. all of the above
What happens to consumer surplus in the iPod market if iPods are normal goods and buyers of iPods experience an increase in income?
a. Consumer surplus decreases. b. Consumer surplus remains unchanged. c. Consumer surplus increases. d. Consumer surplus may increase, decrease, or remain unchanged.