If nation A has a comparative advantage over nation B in the production of a product, this implies:
A. it requires fewer resources in A to produce the good than in B.
B. the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B.
C. that nation B could not benefit by engaging in trade with A.
D. that nation A could not benefit by engaging in trade with B.
Answer: B
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Which of the following is an example of the recognition lag?
A. The recession began in July, but the data did not confirm that fact for seven more months. B. Fearing inflation, the Fed reduced the money supply in March, but the aggregate demand did not begin to shift to the left until November. C. The aggregate demand initially shifted to the right in January, but did not fully shift until October. D. Once the recession was recognized, it took three months to formulate a new policy to combat it.
During the financial crisis in 2007 and 2008, financial institutions believed that default risks were higher. As a result, there was ________ in the supply of loanable funds and a ________ in the real interest rate
A) a decrease; fall B) an increase; rise C) an increase; fall D) a decrease; rise
A profit-maximizing monopolist will receive zero profits when
A) the average total cost curve lies above the demand curve for all possible rates of output. B) the average total cost curve is tangent to the demand curve at the profit maximizing price. C) marginal revenue, marginal cost, and average total cost are all equal. D) a second firm enters the industry.
The characteristics that money should have include:
a. portability, durability, and flexibility. b. durability, flexibility and stability. c. durability, portability, and non-homogeneity. d. scarcity, portability, and divisibility. e. portability, homogeneity, and flexibility.