It takes Anne 3 hours to make a pie and 4 hours to make a shirt. It takes Mary 2 hours to make a pie and 5 hours to make a shirt. Anne should specialize in making shirts and Mary should specialize in making pies, and they should trade
a. True
b. False
Indicate whether the statement is true or false
True
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When there is a cost or benefit that affects someone other than the seller and buyer, then there is
A) a tax. B) a subsidy. C) a quantity regulation. D) a price regulation. E) an externality.
When production of a good results in an external cost, the unregulated competitive market equilibrium quantity is
A) the efficient level of output. B) greater than the efficient level of output. C) not zero but is less than the efficient level of output. D) unattainable. E) zero.
The above figure shows a graph of the market for pizzas in a large town. At a price of $5, there will be
A) excess demand. B) excess supply. C) equilibrium. D) zero demand.
When a manufacturer's home currency appreciates substantially,
a. domestic sales decline b. foreign sales decline c. company-owned foreign plant and equipment will increase d. margins often decline e. all of the above