Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. Calculators Per HourComputers Per HourSmith10010Jones1206 If Smith and Jones are dividing their time efficiently and producing fewer than 10 computers and more than 120 calculators per hour, then Smith will ________ and Jones will ________.
A. produce only computers; produce only calculators
B. split his time between computers and calculators; produce only calculators
C. produce only calculators; split his time between computers and calculators
D. produce only calculators; produce only computers
Answer: B
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Explain why the purchase and sale of used goods and of financial assets are not included in the calculation of GDP even though transactions in these items amount to billions of dollars daily
What will be an ideal response?
If price equals average total cost at the profit-maximizing output level, then in the short run,
a. profit is positive b. profit is negative c. the firm will go out of business d. the firm will earn zero profit e. the firm's supply curve is horizontal
The median voter theorem states that:
A. politicians choose policies that, on average, generate more benefits than costs for the average voter. B. the median voter tends to be the most informed voter. C. candidates whose policies reflect the preferences of the median voter are more likely to win an election. D. political success depends on candidates taking positions that are either to the right or to the left of the political center.
Mel is thinking of going on a cruise. Mel values a cruise in nice weather at $2,000 and values a cruise in bad weather at $50. The probability of nice weather is 60 percent and the probability of bad weather is 40 percent. Trip insurance is sometimes available. If purchased, it allows travelers to delay the cruise until the weather is nice. The amount of money that Mel is willing to pay for trip insurance will be:
A. the same regardless of whether she is risk-averse or risk-neutral. B. positive if she is risk-neutral and negative if she is risk-averse. C. lower if she is risk-averse instead of risk-neutral. D. higher if she is risk-averse instead of risk-neutral.