As a result of trade between two countries which are of completely different economic sizes, specialization in the Ricardian 2X2 model tends to
A) be incomplete in both countries.
B) be complete in both countries.
C) be complete in the small country but incomplete in the large country.
D) be complete in the large country but incomplete in the small country.
E) sustain one countries economy in in direct proportion to the other.
C
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As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at smaller levels of existing capital per worker
a. True b. False Indicate whether the statement is true or false
The figure below shows the national market for mopeds in a small country. Dd and Sd are the domestic demand and supply curves of mopeds respectively.
If there is initially free trade, and then a $50 per unit subsidy is given to the domestic producers of mopeds, domestic production will increase by
A. 100,000 units. B. 1,200,000 units. C. 700,000 units. D. 600,000 units.
If the government wants to regulate a natural monopoly, it will force the firm to set price equal to
A) average cost. B) marginal cost. C) marginal revenue. D) None of the above.
One important reason why the United States government is not likely to go bankrupt even with a large public debt is that it has:
A. The power to print money to finance the debt B. A strong military to protect it from creditors C. The capacity to pay off its outstanding debt with gold D. The ability to decrease interest rates and increase investment spending