Which of the following is an example of a scarce good?
What will be an ideal response?
All goods are scarce
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If 1 bottle of wine costs 4 loaves of bread in England, then 1 loaf of bread must cost 1/4 bottle of wine. For England to specialize in bread production, England must be a more efficient bread producer than Portugal, which means that England's cost of producing bread must be less than Portugal's cost. Thus if producing 1 loaf of bread in Portugal costs more than 1/4 bottle of wine (or, equivalently, if producing 1 bottle of wine in Portugal costs less than 4 loaves of bread), then England will specialize in bread production and Portugal will specialize in wine production.
(i) What is the cost of growing a bushel of wheat in each state? What is the cost of growing a bushel of corn in each state? (ii) Suppose each state is self-sufficient and there is no trade. If each state chooses to produce equal amounts of the two crops, how much wheat and corn will each state produce? (iii) If the two states begin to trade, with each specializing in its area of comparative advantage, which state will produce wheat and which state will produce corn? How will the total production between the two states compare to the situation where each was self-sufficient?
Consider the following three statements:
i. You can either stand during a college football game or you can sit. You believe that you will see the game very well if you stand and others sit but that you will not be able to see at all if you sit and others stand. You therefore decide to stand. ii. Your friend tells you that he expects many people to stand at football games. iii. An economist studies photos of many college football games and estimates that 75 percent of all fans stand and 25 percent sit. Which of these statements deals with optimization, which deals with equilibrium, and which deals with empiricism? Explain.
If firms are earning economic profit in a monopolistically competitive market, which of the following is most likely to happen in the long run?
A) Some firms will leave the market. B) Firms will join together to keep others from entering. C) New firms will enter the market, thereby eliminating the economic profit. D) Firms will continue to earn economic profit.
If there is an improvement in the technology used to produce a good, then the supply curve for that good will shift to the left
a. True b. False Indicate whether the statement is true or false