The operation of the total economy can best be demonstrated by a
a. merry-go-round.
b. circular flow.
c. Ferris wheel.
d. roller coaster.
b. circular flow.
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If a nation has no absolute advantage, then it
A) cannot gain from trade. B) still gains from trade. C) can only gain from trade if it raises its productivity levels. D) can only gain from trade if it reduces wages paid. E) can only gain from trade if it produces outside its production possibilities curve.
A monopolistically competitive firm that earns a profit in the short run will definitely incur a loss in the long run
a. True b. False Indicate whether the statement is true or false
Since it is costly for stockholders to monitor corporate managers, managers may be able to achieve personal perks and pursue other policies that conflict with profit maximization. This is an example of
a. an external benefit. b. economies of scale. c. the principal-agent problem. d. sunk costs.
Refer to Figure 3-13. Suppose Peru decides to increase its production of rubies by 30. What is the opportunity cost of this decision?
a. 1/8 emerald b. 1/3 emerald c. 1 emerald d. 3 emeralds