Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather more mangoes per hour than Maryann and can also catch more fish per hour than can Maryann. Therefore:
A. Ginger should specialize in the activity for which she has an absolute advantage.
B. There are no gains to specialization and trade for Ginger.
C. There are no gains to specialization and trade for Maryann.
D. Maryann should specialize in the activity for which she has a comparative advantage.
Answer: D
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A) its value will depreciate. B) its quantity supplied in exchange for the other currency will decrease. C) its quantity demanded in exchange for the other currency will increase. D) its value will appreciate.
A change in the slope of a budget constraint indicates:
A) a change in the price of either good that causes a change in the opportunity cost. B) a change in the consumer's income. C) a change in the price of either good without a change in the opportunity cost. D) a change in the consumer's tastes and preferences.
If price = marginal cost at the output produced by a perfectly competitive firm and the firm is earning an economic profit, then
A) marginal revenue is less than price. B) price exceeds average total cost. C) total revenue equals total cost. D) average total cost is at a minimum.
A paint firm has just announced that it will be building a new plant in a small town that is currently experiencing a high level of unemployment. The new plant will create 500 new jobs in the area and will occupy unused land at the edge of town. The plant will also dump some harmful chemicals into the town's river. From an economic standpoint this dumping of chemicals
A. creates a negative externality. B. is unimportant since the firm is reducing the unemployment in the region. C. is the production of a public good. D. creates a positive externality.