The United States produces both automobiles and computers more efficiently than Mexico. Nevertheless, it is possible that both nations would benefit from trade in these items. The reason for this is
A. the law of comparative advantage.
B. the inflation-unemployment trade-off.
C. externalities.
D. the cost disease of personal services.
E. attempts to repeal the law of supply and demand.
Answer: A
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Are the previous statements correct or incorrect? What is the long-run profit or loss outcome for firms in a perfectly competitive market?
The owner of a proprietorship might decide incorporate the firm as a corporation in order to
A) be able to conduct business in more than one county. B) avoid the principal-agent problem. C) be eligible for patent protection of new products. D) gain limited liability.
Everything else held constant, a change in workers' expectations about inflation will cause ________ to change
A) aggregate demand B) short-run aggregate supply C) the production function D) long-run aggregate supply
Which of the following means that the country is a net borrower from abroad?
a. current account surplus b. current account deficit c. trade surplus d. trade deficit