If country A exports good X to country B and country B exports good Y to country A, it is most likely that
A. A has an absolute advantage in the production of good X.
B. B is producing less of good Y than in the no-trade case.
C. B has a comparative advantage in the production of good Y.
D. the opportunity cost of domestic production of good Y for country A is lowered with trade.
Answer: C
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Assuming that banks have loaned all excess reserves, then an increase in checking account balances brought about by an increase in deposits is equal to
A) (the initial deposit) × (the reserve ratio). B) (total reserves) × ( the reserve ratio). C) (the initial deposit) × (1 / reserve ratio). D) (total reserves) × (1 / reserve ratio).
Advertising can be a signal of quality
a. only if consumers are irrationally attracted to products they see advertised. b. if advertising is freely available to all firms. c. if the benefit of attracting customers is greater for firms with better products. d. only if the content of the ads contains credible information about the products.
Use the above figure. Total revenue at the profit-maximizing output is
A. $5,600. B. $8,000. C. $4,800. D. $9,600.
What is one reason car insurance seems much cheaper than health insurance?
A) Health insurance entails more idiosyncratic than systematic risk, and therefore the gains to diversification are more dramatic. B) Car insurance entails more systematic than idiosyncratic risk, and therefore the gains to diversification are more dramatic. C) Health insurance entails more systematic than idiosyncratic risk, and therefore there are fewer gains to diversification. D) Health insurance is manipulated through market power, and car insurance is not.