The benefits to specialization are even greater when two trading partners have:
A. absolute advantages in producing the same goods.
B. large differences in opportunity costs.
C. very similar opportunity costs.
D. similar consumption preferences.
Answer: B
You might also like to view...
Consider a general Cobb-Douglas production function q = ALaKb
where A, a and b are positive constants. Using this production function, derive the short-run cost function for a fixed capital stock, K0, wage rate w, and capital rental rate r.
A worse of a recession is called _______ in the business cycle.
a. a downturn b. a peak c. a trough d. an expansion
Which of the following physical relationships might generate economies of scale?
A) Proportionally larger pipes can transport more than a proportional increase in oil. B) Larger equipment tends to weigh more and use more fuel on a per-unit-of-output basis. C) Each lift truck requires one lift truck driver. D) A doubling of all inputs leads to a doubling of output.
Other things remaining equal, total factor productivity will fall if _____
a. labor input grows more slowly than total output b. capital input grows faster than total output c. the economy's output divided by total inputs increases d. the ratio of total output to the stock of labor and capital changes by zero percent e. the ratio of total output to the stock of labor and capital increases