Molly needs 30 minutes to wash the car and 45 minutes to mow the lawn. Renee needs 1 hour to wash the car and 2 hours to mow the lawn. Which of the following statements is correct?
a. Molly should specialize in both tasks.
b. Renee should specialize in both tasks.
c. Each woman should specialize in the task in which she has the absolute advantage.
d. Absolute advantage is not an appropriate guide for determining specialization.
e. Neither woman should specialize.
D
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If some activity creates external benefits as well as private benefits, then economic theory suggests that the activity ought to be
A. subsidized. B. prohibited. C. taxed. D. left alone.
Both the Latin American countries and the sub-Saharan countries have poor economic growth records due to
A) climate. B) geography. C) colonization. D) arbitrary governance. E) indifference from the World Bank.
If a currency decreases in value in response to market forces, this process is known as
A. devaluation. B. depreciation. C. deflation. D. degeneration.
Suppose Canada and China can both produce cars and airplanes, and Canada has the comparative advantage in the production of airplanes while China has the comparative advantage in the production of cars. Also, suppose China has an absolute advantage in the production of both cars and airplanes. China should