Country A can produce either 2 tons of cocoa or 4 cars with 10 units of labor. Country B can produce either 5 tons of cocoa or 25 cars with 10 units of labor. Based on this information, which of the following is true?
(a) Country A has an absolute advantage in the production of cocoa, while Country B has a comparative advantage in the production of cocoa
(b) Country A has a comparative advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars
(c) Country A has an absolute advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars
(d) Country A has a comparative disadvantage in the production of both goods
(e) Neither country has a comparative advantage in the production of either good
Ans: (b) Country A has a comparative advantage in the production of cocoa, while Country B has a comparative advantage in the production of cars
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Evidence of rational decision making is strongest for those with more of which of the following?
a. wealth b. education c. income d. all of the above
Carlos and Darla are playing the dictator game. Carlos is assigned the role of dictator and given $20 to split between the two of them. Based on previous experiments with this game by behavioral economists, which is the least likely outcome?
A. Carlos will keep all of the money for himself. B. Carlos will give all of the money to Darla. C. Carlos will split the money evenly with Darla. D. Carlos will split the money, keeping a little more than half for himself.
The distribution of money income can be represented graphically using
A) supply and demand diagrams. B) a Lorenz curve. C) a Keynesian curve. D) a Distribution curve.
In the strategic view of bargaining:
a. Bargaining is described by standard game theory rules b. The game is played without specific strategies c. The game always results in a fifty-fifty split d. The game is played just for the fun of it