Distinguish the concepts of comparative advantage and absolute advantage
What will be an ideal response?
Comparative advantage is the ability to produce a good or service at a lower opportunity cost compared to other producers, while absolute advantage is the ability to produce more units of a good or service using a given quantity of labor or resource inputs. Comparative advantage is a relative concept and it is the basis for specialization.
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In the foreign exchange market, the supply curve for dollars slopes upwards because
A) as the exchange rate rises, imports become more expensive, and more dollars are supplied to pay for the imports. B) as the exchange rate rises, imports become cheaper, and more dollars are supplied to pay for the increase in the quantity of imports. C) as the exchange rate rises, more dollars are supplied since the profit from selling dollars falls. D) supply curves always slope upwards.
If a consumer is relatively insensitive to changes in the price of a good, then the consumer's demand for the good is
A) elastic. B) unit elastic. C) inelastic. D) perfectly elastic.
For a firm in a perfectly competitive market, if it is producing at a level of output where marginal costs are equal to marginal revenue it:
A. should cut back production to increase profits. B. should increase production to increase profits. C. is producing a profit-maximizing quantity. D. is impossible to tell how quantity should be changed without more information.
In 2010 and 2011, President Obama advocated deficit reduction through decreased spending while Republicans in Congress advocated increased taxation to achieve the same goal
a. True b. False Indicate whether the statement is true or false