Explain comparative advantage
What will be an ideal response?
Comparative advantage is the advantage in the production of a product enjoyed by one country over another when that product can be produced at lower cost in terms of other goods foregone than it could be in the other country.
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When applying for a loan, a borrower tends to know more about her ability to pay it back than does the bank. This is an example of
a. perfect information b. moral hazard c. a low marginal benefit of information for the bank d. asymmetric information e. optimal search
As cities prospered and per-capita incomes increased, the demand for bus travel diminished. This suggests that:
a. cities could raise revenue by increasing bus fares. b. the demand for bus travel is price elastic. c. bus travel and automobile travel are complements. d. bus travel is an inferior good.
In the classical long-run model,
a. we focus on labor resources, rather than capital or land b. we study thousands of different resource markets c. we concentrate our attention on three resource markets: land, labor, and capital d. we focus on two markets: households and firms e. the number of variables we include depends upon whether we are focusing on the short run or the long run
What is the most probable reason why garbage men have higher wages than waiters?
A. Marketplace discrimination B. Active unionization in the garbage collection field C. Higher demand for garbage men than nurses D. The nonmonetary attractiveness of garbage collection causing fewer people to want to be garbage men