Amy can produce either 5,000 pounds of cheese or 20 cars per year. Mike can produce either 5,000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Mike should specialize in producing
A. cars.
B. cheese.
C. both cheese and cars.
D. neither cheese nor cars.
Answer: B
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Explain the differences between aggregate demand shocks and aggregate supply shocks
What will be an ideal response?
The unemployment rate equals the
A) number of employed persons divided by the number of unemployed persons. B) number of unemployed persons divided by the civilian non-institutional population. C) number of unemployed persons divided by the civilian labor force. D) sum of unemployed persons and discouraged workers divided by the civilian labor force.
If equilibrium GDP is greater than full employment GDP there is
A. an inflationary gap. B. a recessionary gap. C. both an inflationary gap and a recessionary gap. D. neither an inflationary gap nor a recessionary gap.
Bethany decides to build a chicken coop, get some chickens, and start selling fresh eggs in her neighborhood. This example describes which of the following characteristics of perfect competition?
A. large number of small firms B. homogeneous goods C. very easy entry and exit D. imperfect information