Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 36 units of food per year or 18 units of clothing. Which of the following is true?
a. Iceland has both a comparative and absolute advantage in producing food
b. Iceland has a comparative advantage, but not an absolute advantage in producing food.
c. Lavaland has both a comparative and absolute advantage in producing clothing.
d. Lavaland has an absolute advantage, but not a comparative advantage in producing clothing.
d
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Exhibit 30-5
?
A. underproduces; Q1 B. overproduces; Q2 C. overproduces; Q2 - Q1 D. underproduces; Q2 - Q1
Which of the following best illustrates the adverse selection problem?
A) a professional football team that consistently drafts poor players B) an economic agent who engages in risky behavior once a loan is received C) an individual who hides a pre-existing condition from a health insurer D) an individual who experiences a lost of income by not working while attending college
Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?
a. Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. b. Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. c. Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. d. Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.
In the automobile industry, workers have just negotiated a new contract giving workers a large raise. There has also been an increase in the number of licensed drivers who are in the market for a new car. In the market for new automobiles, the effects that these changes will have on the equilibrium price and quantity are
A. price will increase, and quantity will decrease. B. price will increase, and the effect on quantity is indeterminate. C. price will decrease, and quantity will increase. D. price will decrease, and the effect on quantity is indeterminate.