Table 35.1CountryTons of SoybeansComputerChina100300United States150750Based on the information in Table 35.1, assume China and the United States have the same amount of resources with which to produce soybeans and computers and they produce no other goods. From the information in Table 35.1, it is clear that
A. China has a comparative advantage in computers.
B. The United States has an absolute advantage in both goods.
C. The United States has a comparative advantage in both goods.
D. China has both an absolute and comparative advantage in soybeans.
Answer: B
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Use the above table. Assuming constant opportunity costs, a comparative advantage in producing beef is possessed by
A) neither Argentina or France. B) both Argentina and France. C) Argentina. D) France.
If the equilibrium rate of interest would be 10 percent, but the usury law sets 8 percent,
a. the quantity of funds supplied would be greater than the quantity demanded. b. economic efficiency would be promoted. c. some applicants for loans would likely be turned down. d. lenders would be able to fund fully all requests for loans.
Suppose that businesses and consumers become much more optimistic about the future of the economy. To stabilize output, the Federal Reserve could
a. buy bonds to raise interest rates. b. buy bonds to lower interest rates. c. sell bonds to raise interest rates. d. sell bonds to lower interest rates.
Suppose the production function is Q = min{K, 2L}. How much output is produced when 4 units of labor and 9 units of capital are employed?
A. 9 B. 4 C. 8 D. 2