Maximum Feasible Hourly Production Rates for EitherFood or Cloth Using All Available Resources
Using the data in the above table and assuming constant opportunity costs, it is correct to state that
A. the United States has an absolute advantage in producing cloth.
B. Mexico has a comparative advantage in producing both food and cloth.
C. the United States has a comparative advantage in producing both food and cloth.
D. Mexico has a comparative advantage in producing food.
Answer: D
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Suppose that because of climatic conditions, the smog levels in Los Angeles suddenly soar to dangerous levels. The most successful policy in this case would be
a. direct controls to limit driving. b. taxes on drivers at rush hours. c. voluntary cooperation to reduce driving. d. removal of autos with excessive emissions.
The "war on terror" waged by the United States:
A. shifted the production possibilities curve to the right. B. caused the United States to shift from "defense goods" to "civilian goods." C. shifted the production possibilities curve inward. D. caused the perceived marginal benefit curve for "defense goods" to shift out.
If the marginal physical product of more labor is twice as high as the marginal physical product of more machinery, a rational firm should
a. reduce the labor used and increase the machinery used if labor costs half as much as machinery. b. reduce the labor used and increase the machinery used if labor and machinery cost the same amount. c. reduce the labor used and increase the machinery used only if labor costs more than twice as much as machinery. d. reduce the labor used and increase the machinery used only if labor costs exactly twice as much as machinery.
Which of the following has proved to be spectacularly false, at least recently?
a. as an expansion proceeds, people will hold no more cash b. as an expansion proceeds, banks will hold no more excess reserves c. the oversmplified money multiplier formula is predicated on two critical assumptions d. All of the above are false.