In Table 17.4, Brazil has 
A. a comparative advantage in lumber but not an absolute advantage.
B. an absolute advantage but not a comparative advantage in cars.
C. an absolute and comparative advantage in both goods.
D. an absolute and comparative advantage in lumber.
Answer: A
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According to the permanent income hypothesis, a temporary increase in income that does not affect average lifetime income would
A) cause no change in consumption. B) cause a decrease in consumption and saving by the same amount. C) cause an increase in consumption and saving by the same amount. D) cause a large increase in consumption.
Which of the following is TRUE regarding perfect competition? I. The firms are price takers. II. Marginal revenue equals the price of the product. III. Established firms have no advantage over new firms
A) I and II B) II and III C) I, II and III D) I only
An efficiency wage
A) is lower than the market wage and tends to decrease productivity. B) is higher than the market wage and tends to decrease productivity. C) is lower than the market wage and tends to increase productivity. D) is higher than the market wage and tends to increase productivity.
Suppose a patent applicant approaches an insurance company and seeks to purchase an insurance policy that her patent will not net $1m in the next three years. The insurance company
A) will sell her an insurance policy because the proposal entails uncertainty not risk. B) will sell her an insurance policy because the proposal entails risk not uncertainty. C) will not sell her an insurance policy because the proposal entails uncertainty not risk. D) will not sell her an insurance policy because the proposal entails risk not uncertainty.