Alice and Gene work in the mailroom, sorting and delivering mail. In order for them to benefit from specialization and trade, Alice must
A) be able to both sort and deliver faster than Gene.
B) be equally productive in both sorting and delivering.
C) have a comparative advantage in both sorting and delivering.
D) have a comparative advantage in one task and Gene must have a comparative advantage in the other task.
E) be equally productive as Gene in both sorting and delivering.
D
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The demand curve for a monopolistic competitor slopes downward because: a. quantity demanded drops to zero after a slight price increase
b. there are close, but not perfect, substitutes for the product. c. customers have no loyalty to the product. d. the product is not differentiated in any way from those offered by other sellers.
Which of the following is not an example of market failure?
a. Extreme income inequality b. Externalities c. Efficient equilibrium d. Lack of competition
A person or a country can have comparative advantage in all activities.
Answer the following statement true (T) or false (F)
Which of the following would NOT be considered a fixed cost of production?
A) wages paid to labor B) the opportunity cost of capital C) interest payments on a loan D) insurance payments on plant and equipment