What is the law of comparative advantage, and why is it important in international trade?
The law of comparative advantage states that aggregate output is maximized when countries specialize in the production of goods for which they are the lowest opportunity cost producer and then trade for other goods. It explains how countries can improve their situation through trade, rather than producing all goods themselves.
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What are the competitive equilibrium wage and employment level in Figure 31.1?
A. $11; 32 workers. B. $8; 10 workers. C. $4; 13 workers. D. $5; 16 workers.
Which one of the following transactions would be included in GDP?
a. Ms. Kim pays $50 for a used picture frame at a neighborhood garage sale. b. Mr. Doe donates $500 to his town's junior college scholarship fund. c. Ms. Bartolini pays $500 to fix the front end of her car damaged in a recent accident. d. Ms. Smith pays $5,000 to purchase 100 shares of Microsoft stock (assume no sales commission is made on the exchange).
Rent ceiling
What will be an ideal response?
Economic stagnation coupled with high inflation is commonly called:
A. stagflation. B. inflationary stagnation. C. stagnatory growth. D. inflagnation.