How are the roles of the household different in the goods market and in the factor markets?
What will be an ideal response?
In the goods market, households are buyers. They purchase the goods and services produced by the firms. In exchange for the goods and services, households pay firms. In the factor market, households are sellers. They provide the services from land, labor, capital, and entrepreneurship to the firms. In the factor markets, households receive payments from firms.
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Suppose an American worker can make 50 pairs of gloves or grow 300 radishes per day. On the other hand, a Bangladeshi worker can produce 100 pairs of gloves or grow 200 radishes per day. Using the concepts of advantage and trade, we can say that the opportunity cost of one pair of gloves is:
A. lower for the United States than Bangladesh, therefore the United States has a comparative advantage in glove production. B. higher for the United States than Bangladesh, therefore the United States has a comparative advantage in radish production. C. the same for both the United States and Bangladesh, therefore no comparative advantage exists. D. the same for both the United States and Bangladesh, therefore they both have the comparative advantage in glove production.
"Monetary instability has been the major cause of economic instability in this country. Expansion in the money supply has been the source of every major inflation. Every major recession has been either caused or perpetuated by monetary contraction." Who among the following would most likely adhere to this view?
a. Monetarists. b. Keynesians. c. Demand-side economists. d. Quantity theorists.
Taxes on polluting firms have
a. been tried, but not successfully. b. been successful in Germany in reducing water pollution. c. resulted in bankruptcy of the affected firms. d. never been tried to see if they work.
If there is a technological inprovement, PPF curve will shift inward.
Indicate whether the statement is true or false.