Given that two countries (A and B) each specialize in the production of one good and voluntarily trade it for the other country's good, then:
A) only country A experiences positive gains from trade.
B) only country B experiences positive gains from trade.
C) both countries experience positive gains from trade.
D) both countries experience negative gains from trade.
Ans: C) both countries experience positive gains from trade.
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A shift in demand toward the foreign country's goods would ________ the domestic real interest rate and ________ net desired saving (desired saving less desired investment) in the economy
A) lower; increase B) lower; decrease C) raise; increase D) raise; decrease
The market demand for wheat is Q = 100 - 2p + 1pb, where pb is the price of barley. If the price of wheat is $2, the price elasticity of demand
A) equals (-4/46). B) equals (-46). C) equals (-1). D) cannot be calculated without more information.
Using the above figure, which of the lines in the above diagram represents a proportional tax?
A) A B) B C) C D) none of them
Which of the following ways of distributing the laptops would be more efficient? (Check all that apply.)
A. Using a first-come, first-served rule. B. Auctioning off the laptops to the highest bidders. C. Using a random lottery to decide who gets the laptops. D. Using flexible prices, so those who value the laptop more would pay more for it.