Specialization and international trade lead to
A. an enhanced level of consumption.
B. an outward shift in the production possibilities curve.
C. a lower opportunity cost of domestic production of all goods.
D. an inward shift in the consumption possibilities frontier.
Answer: A
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The break-even point on the consumption function represents the point where
A) consumption is zero. B) income equals consumption plus spending. C) consumption equals spending. D) consumption equals income.
Beef is a normal good and people's incomes fall. At the same time a bumper corn crop reduces the cost of feeding steers. These changes result in
A) an increase in the equilibrium quantity of beef. B) an increase in the equilibrium quantity of beef if the shift in the demand curve is smaller than the shift in the supply curve. C) an increase in the equilibrium quantity of beef if the shift in the demand curve is larger than the shift in the supply curve. D) no change in the equilibrium quantity of beef.
Which of the following assumptions of the classical model is the best reason we cannot use it to explain short-run economic fluctuations?
a. Markets never clear in the long run. b. The labor market clears. c. Prices remain constant and supply and demand adjust. d. It does not show how an economy recovers from a recession. e. Government intervention is essential to get markets to clear.
Walter is just learning how to ski. He states that every time he goes skiing, he has more fun than the last time. This means his marginal utility of skiing is
a. increasing b. constant c. decreasing d. zero e. negative