Two countries will have zero incentive to trade if their production possibilities curves are parallel straight lines because
A. One country has an absolute advantage in the production of both goods, thus providing that country with no incentive for trade.
B. The opportunity costs for both countries are the same.
C. One country has a comparative advantage in the production of both goods, thus providing that country with no incentive for trade.
D. An intersection of the two lines is not possible, and therefore a trade equilibrium is not possible.
Answer: B
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Equilibrium price and quantity are determined by:
A. both supply and demand. B. demand. C. supply. D. government regulations.
According to the functional distribution of income, in the United States,
A) capital earns most of the income. B) the income earned by capital and labor are approximately equal. C) labor earns most of the income. D) land earns most of the income. E) entrepreneurs earn most of the income.
The classic example used to discuss the problem of adverse selection is:
A. fruit and produce markets, such as lemons. B. workers who shirk when their effort isn’t closely monitored. C. the imbalance of information that exists between a buyer and seller of a used car. D. drivers with insurance who tend to drive more recklessly.
If an oligopolist's competitors follow its price cuts but ignore its price increases, the oligopolist will face a gap in its marginal revenue schedule.
Answer the following statement true (T) or false (F)