Answer the following statement(s) true (T) or false (F)
1 A farmer has a comparative advantage at growing wheat if his cost of growing wheat is smaller than his cost of growing any other crop.
2. A farmer has a comparative advantage at growing wheat if his cost of growing wheat is less than the cost of another farmer growing wheat.
3. By definition, someone who has an absolute advantage must also have a comparative advantage.
4. If there are only two activities on which a person can work, and there are two people to do the work, then it is impossible for one person to have a comparative advantage in both activities.
5. By definition, someone who has a comparative advantage in producing soft drinks must also have an absolute advantage in producing soft drinks.
1. False
2. True
3. False
4. True
5. False
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Which of the following is a diversity of industry argument in favor of restrictions on foreign trade? a. Foreign producers must be prevented from exporting their goods below cost of production
b. Domestic workers must be protected from the lower wages paid in foreign countries. c. The nation's security demands we ensure an adequate domestic supply of certain strategic goods. d. Don't have all of your eggs in one basket. e. Industries in the early stages of development must be protected from more mature producers.
China is currently a member of the WTO
a. True b. False
If resources are allocated efficiently in a market economy:
A. each person's utility is maximized, and so the result is Pareto optimal. B. the outcome will always be socially desirable. C. the way final goods and services are distributed does not matter to society. D. the outcome may not be socially desirable if distributional issues are also important.
An import quota:
A. limits the amount of a good that can be imported, thus decreasing prices. B. limits the amount of a good that can be imported, thus increasing prices. C. increases the amount of a good imported, thus decreasing prices. D. increases the amount of a good imported, thus increasing prices.