Refer to Exhibit 2-9. If Alex and Adam each specialize in the good in which he has a comparative advantage and then engage in trade, ____________________ can consume a combination of goods that lies beyond their PPF
Alex and Adam
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If a monopoly firm reduced the price of its product, which of following must have been true?
A. MR > MC B. MR < MC C. MR > AR D. MC > AR
On the Fourth of July, there is no fireworks display in the small town of Yankeeville, even though it would be efficient for such a display to be produced. Which of the following statements is correct?
a. The lack of a fireworks display in Yankeeville arises because of an externality. b. The lack of a fireworks display in Yankeeville arises because the free-rider problem does not apply to goods such as fireworks displays. c. In deciding not to produce a fireworks display in Yankeeville, private individuals and private firms made decisions that were privately irrational. d. All of the above are correct.
If fluctuations in economic activity come from the supply side, higher inflation is associated with
A. lower interest rates. B. structural deficits. C. higher rates of unemployment. D. lower rates of unemployment.
According to the law of diminishing marginal utility, the marginal utility for a particular product
A) remains constant, regardless of how much of the product is consumed. B) remains constant as long as the product is still considered useful. C) decreases as more of the product is consumed. D) increases as more of the product is consumed.