Suppose China can produce either 300 telephones or 200 DVD players, and Japan can produce either 200 telephones or 100 DVD players. Implicitly, Japan has
A. A comparative but not necessarily an absolute advantage in telephones.
B. An absolute but not necessarily a comparative advantage in telephones.
C. Neither a comparative nor an absolute advantage in telephones.
D. Both an absolute and a comparative advantage in telephones.
Answer: A
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Between 1980 and 2005, the Vanguard Index Fund earned 12.3 percent per year, while the average mutual fund investor earned
A. 1.9 percent. B. 2.3 percent. C. 5.1 percent. D. 7.3 percent.
The Nash equilibrium of this game is for Happy Feet to ________ and Best Nails to ________.
Happy Feet wants to prevent Best Nails from entering the nail salon market. The above game tree illustrates the different strategies and corresponding payoffs for the two firms. Both Happy Feet and Best Nails have the same strategies of advertising (Ad) or not advertising (No Ad). The payoffs represent net profit in millions.
A) Ad; No Ad
B) No Ad; Ad
C) Ad; Ad
D) No Ad; No Ad
Suppose Julia and Zach are the only consumers of milk. Julia's demand for milk is defined as QdJulia = 12 - 3P at prices below $4 and zero for prices above $4. Zach's demand for milk is defined as QdZach = 10 - 2P at prices below $5 and zero for prices above $5. In this case, the market demand curve for milk is:
A. upward sloping. B. a downward sloping straight line. C. kinked at a quantity of 2 units. D. kinked at a quantity of 1 unit.
How does the market mechanism distribute income?