Comparative Advantage
What will be an ideal response?
- Whoever has the lowest opportunity cost of producing one unit of an item has the comparative advantage
- Depends on the slope of their PPF
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In a perfectly competitive, decreasing-cost industry, the long-run market supply curve slopes downward
a. True b. False
The percentage of demand deposits that banks and other financial intermediaries are required to keep in cash reserves is known as
a. the fractional reserve requirement b. the excess reserve requirement c. the legal reserve requirement d. the interest rate e. M1 money
Suppose potatoes were produced in Canada by many, many firms in perfect competition. In Belgium, only one firm produces potatoes for the Belgium market. Suppose as well that for the competitive firms and the monopoly, minimum ATC is the same. We would expect then, that in Belgium the price of potatoes is _____________ and ____________ potatoes are produced and sold than in Canada
a. higher; more b. lower; more c. higher; fewer d. lower; fewer e. the same; fewer
A rise in the domestic interest rate leads to capital
a. outflows and exchange rate appreciation. b. outflows and exchange rate depreciation. c. inflows and exchange rate depreciation. d. inflows and exchange rate appreciation.