What is the basis of the "Cheap Foreign Labor" argument and what are its weaknesses?
What will be an ideal response?
The basis of the argument is the domestic producers cannot compete against foreign produces who are paying their workers low wages. There are two things wrong with this argument. First, wages reflect productivity. Workers in the U.S. earn higher wages because they are more productive. Second, trade flows not according to absolute advantage but according to comparative advantage. All countries benefit, even if one country is more efficient at producing everything.
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Producers typically face increasing marginal costs of production. Thus, their production possibilities frontier would
A) slope upward. B) bend inward. C) bend outward. D) appear as a straight line.
Refer to the figure above. What is the price that a perfectly competitive firm would charge?
A) $0 B) $3 C) $6 D) $9
The Herfindahl-Hirschman Index measures
a. concentration in the industry. b. industrial average output. c. economies of scale. d. consumer confidence.
A main debate between the Classical economists and Keynesian economists was related to: (2)
What will be an ideal response?