When a country pursues its comparative advantage:
A. World output is minimized.
B. Potential gains from trade are minimized.
C. Potential gains from trade are maximized.
D. Imports and exports are equal.
C. Potential gains from trade are maximized.
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When the Fed sells bonds and drains reserves from the banking system, thereby reducing the supply of money, this policy will
a. decrease short-term interest rates to a greater degree than long-term interest rates. b. decrease long-term interest rates to a greater degree than short-term interest rates. c. increase short-term interest rates to a greater degree than long-term interest rates. d. increase long-term interest rates to a greater degree than short-term interest rates.
When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms,
A) a natural monopoly develops. B) the monopoly encounters competition. C) economic profit is reduced to zero. D) the monopoly converts all of the consumer surplus into economic profit. E) there is always the opportunity to price discriminate.
An efficient allocation of resources is demonstrated by a point
A. above the production possibilities frontier. B. below the production possibilities frontier. C. on the production possibilities frontier. D. near the middle of the production possibilities frontier.
Which of the following would not cause an increase in demand for tennis balls?
a. a reduction in the price of tennis racquets b. a decrease in the price of tennis balls c. an unusually sunny fall and winter d. an increase in the popularity of tennis