Law of comparative advantage
What will be an ideal response?
The total output of a group of people, an entire economy or a group of nations will be greatest when the output of each good is produced by the person (or firm) with the lowers opportunity cost for producing that good
*Being able to produce a product with the lowers opportunity cost
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Suppose the production function is Y = AK0.3N0.7. Suppose in 2000, K = 1000, N = 100, and Y = 199.5. In 2010, capital, labor, and output have doubled, so K = 2000, N = 200, and Y = 399
(a) By what percentage did productivity grow from 2000 to 2010? (b) If output had risen to 798 instead of 399, and capital and labor doubled, by what percentage would productivity have grown from 2000 to 2010?
What are the reasons why disclosure by the SEC do not eliminate the information costs of adverse selection?
What will be an ideal response?
A tax imposed on the part of income that households spend is known as a
a. luxury tax b. flat tax c. consumption tax d. income tax e. value tax
If credit cards were suddenly ruled illegal and were no longer used, the most likely effect would be a decrease in the
a. demand for money. b. level of cash balances. c. average checking account balance. d. velocity of circulation.