It is often asserted that the United States no longer manufactures anything, and that instead it imports manufactured goods from countries like China. Critically evaluate this claim.
What will be an ideal response?
If the claim were true then the share of GDP that the U.S. imports would have to be extremely high given the share of goods versus services in the U.S. economy. If we look at the data, only about 15 percent of U.S. GDP is imported and imports from China account for about one-sixth of this. That means that about 85 percent of what Americans consume is made in the United States. Therefore, this claim is false.
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The "minimum efficient scale" of operation in an industry is defined as:
A) the smallest plant size that can be operated by firms in the industry. B) the scale of operation at which economies of scale are exhausted. C) the smallest number of firms that could effectively meet demand for an industry's output. D) the scale of operation by firms in an industry that is least efficient.
International trade
a. reduces world output of goods and services b. lowers economic efficiency c. allows countries to specialize in producing particular products d. creates opportunity cost differentials in production e. shifts each economy's production possibilities frontier inward
The essential feature of the market mechanism is:
A.) That every consumer is concerned about the welfare of others. B.) The price signal for both consumers and producers. C.) Equity in the distribution of income and housing. D.) Government taxation of profits.
The Hatfields and the McCoys both earn $50,000 per year in real terms in the labor market, and both families are able to earn a 25 percent real interest rate on their savings. Assume that all interest is paid out as income in the following year. In the year 2010, both families began to save. The Hatfields saved 8 percent of their income each year; the McCoys saved 10 percent. In 2010, the Hatfields consumed ________ more than the McCoys; in 2011, the Hatfields consumed ________ than the McCoys.
A. $1,000; about $800 less B. $1,000; about $800 more C. $2,000; about $250 less D. $2,000; about $250 more