Mutually beneficial trade will occur whenever the exchange rate between the goods involved is set at a level where:
a. each country can export a good at a price below the opportunity cost of producing the good in the domestic market.
b. each country can import a good at a price below the opportunity cost of producing the good in the domestic market.
c. the exchange ratio is exactly equal to
the opportunity cost of producing the good in each country.
d. each country will specialize in the production of those goods in which it has an absolute advantage.
b
Exhibit 18-1
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Voluntary exchange between buyers and sellers generates ________ in a market economy
A) productive efficiency B) allocative efficiency C) scarcity D) equity
The supply curve for land in New York City is most likely
A) horizontal or perfectly elastic. B) a downward sloping straight line. C) an upward sloping straight line. D) vertical or perfectly inelastic.
MP3 players and MP3 files are complementary goods. The cross-price elasticity of demand between MP3 players and MP3 files is expected to be
A) Positive. B) Negative. C) Equal to zero. D) Undefined.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A. B to A. B. C to D. C. B to D. D. A to C.