Suppose that Country A has an absolute advantage over Country B in the production of both wheat and cloth. The opportunity cost of 1 unit of wheat is 2 units of cloth in Country A and 3 units of cloth in Country B. It follows that
a. Country A has a comparative advantage in both wheat and cloth.
b. Country A has a comparative advantage in wheat.
c. Country B has a comparative advantage in wheat.
d. Country A has a comparative advantage in cloth.
b. Country A has a comparative advantage in wheat.
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In order for barter trades to occur, there must be a
A. singularity of interests. B. bargaining intermediary. C. double coincidence of wants. D. sufficient supply of cash.
Which of the following would cause a decrease in the supply of peanut butter?
A) a decrease in the price of peanut butter B) an increase in the technology used to produce peanut butter C) a decrease in the price of jelly (assuming that peanut butter and jelly are complements) D) an increase the price of peanuts
Changes in ________ that are intended to achieve macroeconomic policy objectives refer to fiscal policy
A) exchange rates B) interest rates C) government taxes and purchases D) the money supply
Deadweight loss as a result of taxation occurs because the:
A. quantity of a good that is bought and sold is above the market equilibrium quantity. B. price that is charged to the consumer is lower than the price the seller receives. C. price that is charged to the consumer is above the market equilibrium quantity. D. quantity of a good that is bought and sold is below the market equilibrium quantity.