Tom and Jerry have two tasks to do all day: makedishes and build fences. If Tom spends all day makingdishes, he will have make 16 dishes. If he instead devotes his day to building fences, Tom will build 4 fences. If Jerry spends his day makingdishes, he will make 14 dishes; if he spends the day building fences, he will build 7 fences. Jerry has a comparative advantage in:
A. dish production because he has the lower opportunity cost of a dishes.
B. dish production because he has the higher opportunity cost of a dishes.
C. fence production because he has the lower opportunity cost of a fence.
D. fence production because he has the higher opportunity cost of a fence.
C. fence production because he has the lower opportunity cost of a fence.
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Refer to Figure 19-4. The equilibrium exchange rate is originally at A, $3/pound. Suppose the British government pegs its currency at $4/pound
Speculators expect that the value of the pound will drop and this shifts the demand curve for pounds to D2. If the government abandons the peg, the equilibrium exchange rate would be A) $4/pound. B) $3/pound. C) $2/pound. D) less than $2/pound.
Economists agree that a monopolistically competitive market structure
A) can eliminate any excess capacity if all firms in the industry devote more funds to differentiating their products. B) lowers consumer utility because consumers pay a price higher than the marginal cost of production. C) is detrimental to society because it leads to a waste of scarce resources. D) benefits consumers because firms produce products that appeal to a wide range of consumer tastes.
In long-run equilibrium, the monopolistically competitive firm:
a. will break even. b. will cease to advertise. c. will earn a positive economic profit. d. will face a perfectly elastic demand curve. e. will no longer need to engage in non-price competition.
When computing the cost of the basket of goods and services purchased by a typical consumer, which of the following changes from year to year?
a. the quantities of the goods and services purchased b. the prices of the goods and services c. the goods and services making up the basket d. All of the above are correct.