Suppose labor productivity differences are the only determinants of comparative advantage, and Brazil and Chile both produce only coffee and sugar. In Chile, either 5 units of coffee or 2 units of sugar can be produced in one day. In Brazil, a day of labor produces either 2 units of coffee or 1 unit of sugar. Calculate the opportunity cost of producing sugar in Brazil
a. Half a pound of coffee
b. 4 pounds of coffee
c. 1 pound of coffee
d. 2 pounds of coffee
e. One and a half pounds of coffee
d
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In the monopolistic competition model
a. firms are price takers b. barriers to entry maintain some monopoly "rents" in the long run. c. one dominant firm acts as the monopolist that is followed by the fringe of competitors. d. none of these.
The income effect of a wage increase is expected to increase
a. supply of labor. b. supply of goods and services. c. demand for leisure. d. demand for labor.
After the price of milk increases, Liza buys more eggs and less hotdogs. For Liza
A. milk, eggs, and hotdogs are all substitutes. B. milk and eggs are substitutes, and milk and hotdogs are complements. C. milk and eggs are complements, and milk and hotdogs are substitutes. D. milk, eggs, and hotdogs are all complements.
Why might a young, healthy person choose not to buy health insurance?
What will be an ideal response?