In the figure below, AB is the production-possibility curve of Canada. I1 and I2 are two of the community indifference curves of Canada. In the absence of trade Canada will:
A. produce at point S1 and consume at point C0.
B. produce at point S1 and consume at point C1.
C. produce and consume at point C0.
D. produce and consume at point S1.
Answer: C
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Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2008, Quality Motors produced $25 million worth of automobiles and sold $12 million in the U.S. and $13 million in Mexico. In addition, it sold $2 million from the previous year's inventory in the U.S. The transactions just described contribute how much to U.S. GDP for 2008?
a. $12 million b. $14 million c. $25 million d. $27 million
A ptomaine poisoning scare causes a decrease in the demand for canned tuna fish. Everything else equal, the demand curve for aluminum cans will
A. become steeper. B. become flatter. C. fall. D. rise.
If the domestic producers of a good benefit from free trade, it suggests that the country:
A. is a net importer of that good. B. does not have a comparative advantage in that good. C. does not have an absolute advantage in that good. D. is a net exporter of that good.
Opportunity cost:
A. is the same as sunk cost. B. includes only monetary expenses. C. is nonexistent for some choices. D. is the net benefit forgone by not undertaking the next best alternative.