The law of comparative advantage says that a person should produce a good if she
a. has the greatest desire to consume that good
b. has the lowest opportunity cost of producing that good
c. has an absolute advantage in a related activity
d. has a comparative advantage in a related activity
e. is equally good at producing this good as someone else is
B
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What is "human capital"? How is it important in the determination of a worker's wage rate?
What will be an ideal response?
Suppose that X and Y are complementary goods. If the price of good X decreases, we can expect the
a. demand for good X to increase b. quantity demanded of good Y to decrease c. quantity demanded of good Y to increase d. demand for good Y to decrease e. demand for good Y to increase
The price received by sellers in a market will decrease if the government
a. imposes a binding price floor in that market. b. decreases a binding price ceiling in that market. c. decreases a tax on the good sold in that market. d. increases a binding price floor in that market.
All of the following could be used to support the argument that the natural rate of unemployment has fallen in the last ten years except
A. the proportion of young people in the labor force is shrinking. B. because the adult population in prison has doubled since 1985, many people who would normally be counted as unemployed are behind bars. C. workers are more insecure because of numerous plant closings and corporate downsizing, and as a result are less likely to quit their jobs to look for work elsewhere. D. unemployment insurance has become more generous in the last ten years.