Refer to Table 2-17. Which of the following statements is true?
A) Lucy has a comparative advantage in making both products.
B) James has a comparative advantage in making both products.
C) Lucy has a comparative advantage in making tricycles and James in making wagons.
D) Lucy has a comparative advantage in making wagons and James in making tricycles.
D
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A professional hockey franchise is trying to assemble a parcel of land to build an arena. There is one vacant warehouse on the land the franchise needs. In this case,
A) eminent domain will reduce transactions costs and make a pie-increasing arena possible. B) eminent domain will reduce the likelihood of holdouts and make a pie-increasing arena possible. C) eminent domain is not called for as the land can probably be acquired more efficiently through bargaining. D) Both A and B are correct.
Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because
A) they do not want to offend their employers who want them. B) they believe the restrictions will protect their jobs. C) politicians lobby to convince workers the restrictions will make them better off. D) they don't understand that the restrictions will threaten their jobs.
If a natural disaster were to cause a negative long-run supply shock to the economy, once the economy adjusts, the new equilibrium will be at a:
A. higher price level and lower level of output. B. lower price level and lower level of output. C. higher price level and higher level of output. D. lower price level and higher level of output.
If resources are combined efficiently in production, then the society
A. is producing at a point on the production possibility frontier but not necessarily at the most-desirable point. B. is experiencing economic growth. C. is producing at a point outside the production possibility frontier. D. is producing at the most-desirable point on the production possibility frontier.