To ensure mutually beneficial trade, the terms of trade between two countries should always
A. Be between their respective opportunity costs in production.
B. Be set to favor the larger country because its output will be greater.
C. Be set to favor the country with the least comparative advantage in a good to ensure the greatest gains from specialization.
D. Allow each country to develop its area of absolute advantage.
Answer: A
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Rivalry among firms would tend to be highest if
a. the industry is growing quickly b. the industry is growing slowly c. the industry is shrinking d. None of the above
If the exchange rate between the Canadian dollar and the American dollar was fixed at 1.30 Canadian dollars per U.S. dollar and investors perceived Canadian bonds to be equal in value and risk to U.S. bonds, if the U.S. bonds are selling for $1,000 and have a 5 percent interest rate, assuming capital flows freely between the two countries what will be the price and the interest rate of the Canadian bonds?
What will be an ideal response?
Consider two points on the PPF: point A, at which there are 50 oranges and 100 apricots, and point B, at which there are 51 oranges and 98 apricots. If the economy is currently at point B, the opportunity cost of moving to point A is
A) 2 apricots. B) 1 orange. C) 98 apricots. D) 3 oranges.
JR Electronics hurries to sell off their tablet computers by offering a spring sale. Which of the following most likely caused this to happen?
a. The company expects the technology for producing tablet computers to become obsolete. b. The company expects the price of tablet computers to plummet. c. The company expects the price of tablet computers to soar. d. The company expects the technology for producing tablet computers to improve.