Suppose France can produce 9,000 potatoes or 3,000 lemons per day, and that Italy can produce 3,000 potatoes or 3,000 lemons per day. Which of the following statements in this context is true?
a. France has an absolute advantage in producing lemons.
b. Italy has a comparative advantage in producing potatoes.
c. Italy would be willing to trade one lemon for anything greater than one potato.
d. Both countries would be willing to trade at a rate of one lemon for one potato.
e. France has a comparative advantage in producing lemons.
c
You might also like to view...
Leisure being a normal good is neither necessary nor sufficient for labor supply to slope up.
Answer the following statement true (T) or false (F)
In economics the term utility refers to
a. the subjective benefit or satisfaction a person expects to receive from a choice or course of action. b. the number of possible uses for a resource. c. the fact that human desire for goods is unlimited while the resources available to meet those desires is limited. d. the highest valued alternative that must be sacrificed when a choice is made.
When the tax structure of a nation is progressive, as incomes increase, the tax rate:
A. declines. B. remains the same. C. increases. D. is proportional.
Compared with a low benefit reduction rate, a relatively high benefit reduction rate in a cash assistance program:
A. reduces the incentive to work. B. increases the incentive to work. C. does not affect the incentive to work. D. will reduce the incentive to work through the substitution effect but will increase the incentive to work through the income effect.