Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs. Then, Liz suggests that they specialize and trade. She would produce only smoothies and Joe would produce only salads
Then she would sell 10 smoothies to Joe at a price of 2.5 salads per smoothie. In this scenario,
A) Liz gains 5 smoothies, and Joe gains 10 smoothies.
B) Liz gains 10 smoothies, and Joe loses 5 smoothies.
C) Liz gains 5 smoothies and 5 salads, and Joe loses 5 salads.
D) Liz gains 10 smoothies and 5 salads, and Joe gains 5 smoothies.
E) Neither of the individuals gains from trade.
D
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In a centrally planned economy, the households and firms decide how economic resources will be allocated
Indicate whether the statement is true or false
At Bert's Bootery, the total cost of producing twenty pairs of boots is $400 . The marginal cost of producing the twenty-first pair of boots is $83 . We can conclude that the
a. average variable cost of 21 pairs of boots is $23. b. average total cost of 21 pairs of boots is $23. c. average total cost of 21 pairs of boots is $15.09. d. marginal cost of the 20th pair of boots is $20.
Refer to the graph shown. In the graph, a recessionary gap exists if the price level is:
A. P0 and the aggregate demand curve is AD1. B. P0 and the aggregate demand curve is AD0. C. P1 and the aggregate demand curve is AD0. D. P1 and the aggregate demand curve is AD1.
The two main characteristics of a public good are:
A. production at constant marginal cost and rising demand. B. nonexcludability and production at rising marginal cost. C. nonrivalry and nonexcludability. D. nonrivalry and large negative externalities.