Suppose the global market for personal computers is monopolistically competitive. If a country engages in a two-way trade in personal computers, such trade is usually based on
A. product differentiation.
B. constant returns to scale.
C. external scale economies.
D. comparative advantage.
Answer: A
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If India decides to enact environmental laws to reduce air pollution, what would be the effect on GDP?
A) GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls. B) GDP would increase as the environmental costs of pollution were not included in the calculation of GDP. C) GDP would increase as the citizens of India were made happier as the air pollution was reduced. D) GDP would increase reflecting the fact that the air would be cleaner.
If your firm's production function has constant returns to scale, and if you double all your inputs, then your firm's productivity will
a. not change. b. increase but not double. c. double. d. more than double.
Suppose an oil cartel has an agreement to restrict members' production in order to maintain a price of $30 per barrel. A single cartel member may want to cheat and exceed its quota so that it can:
A. reduce its costs. B. charge higher prices. C. make demand more inelastic. D. earn a bigger profit.
If, due to a recession, foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended, this will
A) shift the short-run aggregate supply curve of the home country to the left. B) shift the short-run aggregate supply curve of the home country to the right. C) move the home country's economy up along a stationary short-run aggregate supply curve. D) move the home country's economy down along a stationary short-run aggregate supply curve.