The increased efficiency and specialization that results from globalization illustrates the:
A. principle of increasing opportunity costs.
B. cost-benefit principle.
C. principle of comparative advantage.
D. scarcity principle.
Answer: C
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The divergence between money costs and opportunity costs is the smallest in which of the following situations?
A. China hires millions of otherwise unemployable workers to build roads using picks and shovels. B. Wilhelm, a petroleum engineer, is drafted, and his army salary is $1,000 per month. C. Colleen quits her job to stay at home and raise her children. D. A university employs a private contractor to build a field house on land it purchased at full market value from a local farmer.
Producer surplus in a perfectly competitive industry is
A) the difference between profit at the profit-maximizing output and profit at the profit-minimizing output. B) the difference between revenue and total cost. C) the difference between revenue and variable cost. D) the difference between revenue and fixed cost. E) the same thing as revenue.
The United States spends much more on health care per capita than other nations do but does not get better health outcomes.
Answer the following statement true (T) or false (F)
Which of the following comparisons best illustrates a compensating differential?
a. John's wage is higher than Jane's because the value of John's marginal product is higher than Jane's. b. Karl's wage is higher than Kay's because Karl is very personable, and Kay is very gruff. c. Beth's wage is higher than Bill's because Beth's job may cause long-term health problems, and Bill's job will not impair his health. d. All of the above are good illustrations of compensating differentials.