Which of the following statements is true?
A. Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it.
B. Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product.
C. Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product.
D. Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner.
Answer: C
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The productivity curve is a relationship between
A) real GDP per hour of labor and capital per hour of labor, with technology held constant. B) capital per hour of labor and technological growth. C) nominal GDP per hour of labor and capital per hour of labor, with technology held constant. D) real GDP per unit of capital and capital per hour of labor, with technology held constant. E) real GDP per hour of labor and capital per hour of labor whenever technological growth occurs.
Which of the following are the rules for finding the point of allocative efficiency?
A) Produce on the PPF and then produce where the marginal benefit and marginal cost are as large as possible. B) Produce on the PPF and then produce where marginal benefit equals marginal cost. C) Produce on the PPF and then produce where marginal benefit and marginal cost are constant. D) Produce on the PPF and then produce where the marginal benefit exceeds marginal cost by as much as possible. E) Produce anywhere on the PPF.
In which of the following market structures do you find barriers to entry?
A. a monopoly B. a perfectly competitive market C. a monopolistic competition D. Both a monopoly and a perfectly competitive market are correct
The monopolist faces a downward sloping demand curve, and maximizing profits requires the monopolist to
A) accept the market price for its product. B) will produce where the demand curve is inelastic. C) search for the price consistent with producing to the point at which marginal revenue equals marginal cost. D) search for the highest possible price consistent with maximizing its revenues, irrespective of its explicit and implicit opportunity costs.