The following economy produces two products.ProductsProduction Possibilities?ABCDEFSteel012345Wheat100907555300Refer to the above table. In moving from possibility A to F, the cost of a unit of steel in terms of a unit of wheat:
A. remains constant.
B. increases.
C. decreases.
D. increases from A to B, and decreases from B to F.
Answer: B
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Suppose Japan exports televisions to the United States and imports sugar from Argentina. This situation suggests
a. Japan has a comparative advantage relative to the United States in producing televisions, and Argentina has a comparative advantage relative to Japan in producing sugar. b. Japan has a comparative advantage relative to the United States in producing sugar, and Argentina has a comparative advantage relative to Japan in producing televisions. c. Japan has an absolute advantage relative to the United States in producing televisions, and Argentina has an absolute advantage relative to Japan in producing sugar. d. Japan has an absolute advantage relative to Argentina in producing sugar, and the United States has an absolute advantage relative to Japan in producing televisions.
In the graph shown, which of the world supply curves is associated with a trade balance?
A. WAS0 B. WAS1 C. WAS2 D. None create surpluses.
When constructing economic models, economists are more concerned with
A) what people say than what they do. B) what people think than what they need. C) what people do than what they say. D) what people say than how they act.
Country A has a capital-labor ratio that is initially twice as big as that of country B, but neither is yet in a steady state. Both countries have the same production function, f(k) = 6k1/2. Country A has a 10% saving rate, 10% population growth rate, and 5% depreciation rate, while country B has a 20% saving rate, 10% population growth rate, and 20% depreciation rate.(a)Calculate the steady-state capital-labor ratio for each country. Does the initial capital-labor ratio affect your results?(b)Calculate output per worker and consumption per worker for each country. Which country has the highest output per worker? The highest consumption per worker?
What will be an ideal response?