The substitution effect of a price change is depicted by a
a. movement along the budget constraint holding satisfaction constant.
b. shift in the budget constraint at the old prices.
c. movement along the consumer's new indifference curve at the new prices.
d. movement along the original indifference curve to the point where the marginal rate of substitution equals the price ratio for the new set of prices.
d
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Ultimately, quotas ________ the ability of foreign countries to buy the domestic country's exports and therefore ________ wealth
A) increase; create B) increase; destroy C) reduce; create D) reduce; destroy
A firm's economic profits are given by:
a. total revenue minus total accounting cost. b. the owner's opportunity cost. c. total revenue minus total economic cost. d. total revenue minus the cost of capital.
The United States has an absolute advantage in producing T-shirts, but not a comparative advantage, because
A. Another country may have an absolute advantage in producing T-shirts. B. The United States uses fewer resources to produce T-shirts than another country can C. Labor costs in the production of T-shirts are lower in the United States than in other countries. D. Other countries, such as China, can produce T-shirts at a lower opportunity cost relative to the United States.
As a whole, nations are better off after trade and specialization because:
A. nations can consume along their consumption possibilities curve, which is outside of their production possibilities curve. B. nations can consume along their consumption possibilities curve, which is inside of their production possibilities curve. C. nations can consume along their production possibilities curve, which is outside of their consumption possibilities curve. D. nations experience an inward shift of their production possibilities curve.