Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. After comparing each country's production possibilities curve, it is clear that:
A. Country B will lose by trading with Country A.
B. Country A should specialize in trucks and Country B should specialize in cars, and both will benefit from trade.
C. Country A should specialize in cars and Country B should specialize in trucks, and both could benefit from trade.
D. Country A will not benefit from trade.
Answer: C
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If private giving to public goods involves externalities, what is a Pigouvian solution to the public goods problem?
What will be an ideal response?
The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. Both firms setting a high price is NOT a Nash equilibrium because
A) setting a high price is the dominant strategy for each firm. B) neither firm can improve its payoff by setting a low price given that the other firm is setting a high price. C) there is no dominant strategy for either firm. D) both firms can improve their payoff by setting a low price given that the other firm is setting a high price.
An increase in the price of Heinz ketchup is likely to cause:
A. an increase in the demand for Hunt's ketchup, due to a change in preferences. B. an increase in the demand for Hunt's ketchup, due to a change in the price of a substitute good. C. a decrease in the demand for Hunt's ketchup, due to a change in preferences. D. an increase in the demand for Hunt's ketchup, due to a change in the price of a complementary good.
Which of the following is NOT a part of GDP?
A. The value of sales of stocks and bonds bought and sold during the year
B. The value of a haircut
C. The value of a new car produced and purchased during the year
D. The value of new houses built during the year