“The United States has more oil in Alaska than there is oil in Kuwait. Therefore, the United States should stop importing oil.” Evaluate this statement using economic analysis.
What will be an ideal response?
While the statement is based on absolute advantage, the decision on importing oil depends on comparative advantage. The United States may not have a comparative advantage in oil compared to Kuwait if the United States would have a productive alternative to oil production, such as fishing or tourism.
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A price elasticity of demand of 2.3 implies
a. Demand is inelastic b. Demand is elastic c. Demand is unitary elastic d. Demand is perfectly elastic
Higher interest rates caused by an increase in the price level creates:
A. an indirect negative relationship between the price level and investment spending. B. an indirect positive relationship between the price level and investment spending. C. the incentive for firms to invest more in new factories. D. the incentive for individuals to spend more on consumption goods.
Which one of the following will not cause the production possibilities curve to shift outward?
a. increased education b. the construction of a new factory c. more tractors becoming available to farmers d. All of the above cause the production possibilities curve to shift outward.
The European Union is an example of ________ integration.
A) regional B) relative C) global D) bilateral