If Argentina has an absolute advantage in the production of beef and Guatemala has an absolute advantage in the production of bananas, then
A. it is reasonable to expect that specialization will benefit both countries, but trade will not.
B. neither country has anything to gain from specialization and trade.
C. it is reasonable to expect that trade will benefit both countries, but specialization will not.
D. it is reasonable to expect that specialization and trade will benefit both countries.
Answer: D
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A market economy answers the question "how" will goods be produced by focusing on a. dollar votes
b. consumer sovereignty. c. least-cost method of production. d. who can afford these goods.
A friend is telling you that they tend to drink more at parties than they do at home. You ask about why and they tell you that though they enjoy their fifth and sixth drinks the same regardless of where they are. Based on the fact that it is free at the party and they have to pay to replace it at home, you can translate the statement into a verification of
A. the notion of diminishing marginal utility. B. the real-balances effect. C. the substitution effect.
According to classical economists,
a. money was a "veil" that determined the nominal values in which such variables as the level of economic activity were measured. b. money can have a temporary impact on output. c. it is the nominal interest rates that matters in decisions to save and invest. d. Both a and b e. Both a and c
Suppose there are ten identical manufacturing firms that produce computer chips with machinery (capital, K) and labor (L), and each firm has a production function of the form q = 10KL0.5. What is the industry-level production function?
A) Q = 10K10L5 B) Q = 100KL0.5 C) Q = 100L0.5 D) none of the above