Refer to the figure shown, which represents the production possibilities frontiers for Countries A and B. Country A has the comparative advantage in:
A. neither cars nor trucks.
B. cars and Country B has the comparative advantage in trucks.
C. trucks and Country B has the comparative advantage in cars.
D. cars and trucks.
Answer: B
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Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?
A) GDP will not change. B) GDP will increase. C) GDP will decrease. D) GDP may increase or may decrease depending on inflation.
The new monetary policy tool that the Fed began using in 2008 is
A) changing the interest rate paid on reserves. B) imposing a surcharge on credit cards. C) putting a tax on all financial transactions. D) borrowing from China.
A return above implicit and explicit costs is called
A. accounting profit. B. economic profit. C. opportunity cost. D. total revenue.
Suppose that there are two firms, each generating three tons of SO2. Suppose also that the government has set a target abatement level of two tons. Under a policy of uniform abatement with permits, each firm would receive:
A. two non-transferable pollution permits. B. two pollution permits which they could sell to each other. C. one pollution permit with a value equal to that firm's cost of abating one ton of SO2. D. one pollution permit with a value equal to the market price for a pollution permit.