Explain the difference between absolute and comparative advantage, giving an example of your answer
If the United States and Cambodia can both produce both wheat and shoes, but the United States can
produce more of both goods with fewer resources, then the United States has an absolute advantage in the
production of both goods. If the United States and Cambodia can both produce both wheat and shoes, but
the opportunity cost of producing wheat in the United States is lower than the opportunity cost of producing
shoes, then the United States has a comparative advantage. If the United States produces 600 pairs of shoes
and 400 bushels of wheat, but Cambodia produces 400 shoes and 100 bushels of wheat, Cambodia has a
comparative advantage producing shoes.
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When two people trade their initial endowments to a point on the contract curve, only the level of the endowments will determine the new allocation
Indicate whether the statement is true or false
If we compare income mobility in absolute terms, we would measure whether a person's income:
A. is higher than her parents' income. B. is higher at the end of her career compared to the beginning. C. places her higher up in the income distribution over the course of her work-life. D. places her higher up in the income distribution than her parents' income.
Which form of business is also known as a closely held? corporation?
A. Master limited partnership B. Private corporation C. Public corporation D. Sole proprietorship E. Limited liability partnership
When a foreign business firm buys or builds capital goods, this is known as
A. foreign direct investment. B. net foreign domestic investment. C. net private domestic investment. D. depreciation.