Which of the following factors does not help explain incomplete specialization by countries that trade in accordance with comparative advantage?
a. There may be high transportation costs for perishable products or human services.
b. The economies of trading partners may be of vastly different sizes.
c. Opportunity costs of production may not be constant, but may vary with the volume of production.
d. Governments may impose all kinds of barriers to free international trade, such as tariffs and quotas.
e. The cost of making trade deals may have become extremely low because of the existence of the World Trade Organization.
E
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In the long run, perfectly competitive firms make zero economic profit, that is, their owners make a normal profit
Indicate whether the statement is true or false
Tommy's Teddy Bears incurs $300,000 per year in explicit costs and $50,000 in implicit costs. The shop earns $600,000 in revenues and has $1.1 million in net worth. Based on this information, what is accounting profit for Tommy's Teddy Bears?
A) $250,000 B) $300,000 C) $500,000 D) $1.35 million
Suppose that Japan and India are both engaged in the production of radios and rice, and that Japan has an absolute advantage in the production of both goods. If India has a lower opportunity cost for producing rice, then
A. India has a comparative advantage in the production of rice, but it is outweighed by Japan's absolute advantage in rice production. B. India has a comparative advantage in rice production, but there will be no gains from specialization and trade. C. Japan has a comparative advantage in the production of both goods. D. India has a comparative advantage in the production of rice, and specialization and trade between the two countries can be mutually beneficial.
The change in the unemployment rate is approximately equal to
A) the negative of the growth rate of output. B) the negative policy rate. C) the negative inflation rate. D) the negative of the growth rate of money supply.