Use of the principle of comparative advantage involves
a. specialization only.
b. exchange only.
c. both specialization and exchange.
d. money only.
c. both specialization and exchange.
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The difference between the salaries paid to movie stars and to actors who play supporting roles is much greater today than it was in the 1930s and 1940s. What factor explains this increase in relative salaries over time?
A) There was no actors' union in the 1930s and 1940s. The rise of strong actors' unions has caused salaries of movies stars to be greater today than in previous years. B) Technological advances in the entertainment industry increase the revenue that successful movies can earn. This has increased the movie studios' willingness to pay high salaries to movie stars. C) The studio system that dominated the industry in the 1930s and 1940s no longer exists. The studio system allowed movie studios to sign actors to long-term contracts that kept salaries down. D) Agents of movies stars are effective in obtaining large salaries for their clients today. Few movie stars had agents to negotiate for them in the 1930s and 1940s.
The labor market is in equilibrium when:
a. the demand curve lies above the supply curve. b. both demand and supply curves are positively sloped. c. both demand and supply curves are negatively sloped. d. the demand curve intersects the supply curve. e. the demand curve is negatively sloped but the supply curve is positively sloped.
Which of the following is a role of a financial intermediary?
a. Increasing risk to lenders b. Combining a large number of loans of small borrowers into a small number of deposits of large savers c. Decreasing liquidity for savers d. Reducing risk to depositors e. Increasing interest rates for both borrowers and lenders
P-TV and QRS-TV are trying to decide whether to air a sitcom or a reality show in a given time slot. Viewers like both sitcoms and reality shows, but sitcoms are more expensive to produce than reality shows since real actors need to be hired. QRS-TV makes its decision first, and then P-TV observes that choice before making its decision. Both stations know all of the information in the decision tree below. 
P-TV will air a sitcom:
A. only if QRS-TV is also airing a sitcom. B. no matter what QRS-TV does. C. never. D. only if QRS-TV is airing a reality show.