If Canada imports fishing poles from Mexico and Mexico imports bacon from Canada, which of the following would explain this pattern of trade?
A) Mexico has a lower opportunity cost of producing bacon than Canada and Mexico has a comparative advantage in producing fishing poles.
B) The opportunity cost of producing fishing poles in Canada is higher than it is in Mexico, and the opportunity cost of producing bacon in Mexico. is higher than it is in Canada.
C) Mexico must have an absolute advantage in producing fishing poles and Canada must have an absolute advantage in bacon.
D) Mexico has a higher opportunity cost of producing fishing poles than Canada, and Canada has a higher opportunity cost of producing bacon.
Answer: B
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Under which of the following scenarios does an increase in the wage tax cause a drop in employment but no deadweight loss?
A. When the wealth effect for workers is larger than the substitution effect. B. When the wealth effect for workers is smaller than the substitution effect. C. When the wealth effect for workers is equal to the substitution effect. D. It is possible under any of these scenarios. E. There is no scenario under which this is possible.
Refer to Figure 27-1. Suppose the economy is in short-run equilibrium above potential GDP and no policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from
A) D to C. B) C to D. C) E to A. D) C to B. E) A to E.
The profit-maximizing quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectively
A) Q1 and Q2. B) Q1 and Q3. C) Q1 and Q5. D) Q2 and Q3.
Because a monopolist is the sole producer in its market, it can necessarily alter the price of its good (i) without affecting the quantity sold. (ii) without affecting its average total cost. (iii) by adjusting the quantity it supplies to the market
a. (ii) only b. (iii) only c. (i) and (ii) only d. (ii) and (iii) only