Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Assuming both countries have the same amount of resources available to them, which of the following statements is true? Country A has:
A. the absolute advantage in neither the production of cars nor trucks.
B. an absolute advantage in the production of cars, and Country B has the absolute advantage in the production of trucks.
C. an absolute advantage in the production of trucks, and Country B has the absolute advantage in the production of cars.
D. the absolute advantage in the production of both cars and trucks.
Answer: D
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The above figure shows the market for rice in Japan. SDomestic represents the domestic supply curve, and Sworld represents the world supply curve. An import quota of 35 units would
A) cause consumer surplus to fall by "g." B) cause social welfare to fall by $35. C) increase domestic producer surplus by "g." D) have no effect.
Suppose the equilibrium price of good X is $25 and the equilibrium quantity is 124 units. If the price of good X is $2:
What will be an ideal response?
Assuming the economy in the graph shown is currently at equilibrium A, if the government wanted to enact a policy it would likely enact:
A. contractionary fiscal policy in an effort to move aggregate demand to the left. B. contractionary fiscal policy in an effort to move aggregate demand to the right. C. expansionary fiscal policy in an effort to move aggregate demand to the right. D. expansionary fiscal policy in an effort to move aggregate demand to the left.
Lisa eats both pizzas and burritos. If the price of a pizza increases, Lisa's opportunity set
A) becomes larger. B) becomes smaller. C) is unchanged. D) cannot be determined without more information.