If Spain is capable of producing either tapas or soccer balls or some combination of those two products, then Spain should:
A. trade only if it possesses the absolute advantage in the production of both goods.
B. remain self-sufficient if it can produce both efficiently.
C. produce the good it has an absolute advantage in producing.
D. produce the good it has a comparative advantage in producing.
Answer: D
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The U.S. government is an asset to the U.S. economy when it
(a) effectively serves its role as the agent that defines and protects private property rights. (b) taxes one group of individuals and redistributes that taxed income to another group. (c) permits special groups to secure legislative protection from foreign competition in the industries which they own, manage or work within. (d) does all of the above.
The market clearing price refers to the:
A. price where quantity demanded and quantity supplied are the same. B. equilibrium price that quantity supplied is the highest possible. C. maximum price where all suppliers are willing to sell all their production. D. minimum price at which items could be sold.
During the financial crisis of 2007-2009, the U.S. government determined that
a. AIG was too big to fail but Lehman Brothers was not. b. Lehman Brothers was too big to fail but AIG was not. c. both Lehman Brothers and AIG were too big to fail. d. neither Lehman Brothers nor AIG were too big to fail.
Based on the comparative cost ratios implied in Figure 35.2, it is clear that
A. Mexico should import all of its golf shoes from the United States. B. The United States should import all of its baseballs from Mexico. C. The United States should specialize in producing golf shoes, and Mexico should specialize in producing baseballs. D. The United States has a comparative advantage in baseballs and Mexico has a comparative advantage in golf shoes.