Suppose England has a comparative advantage over the United States in producing tea. If this is true, then:
A. the United States has nothing to gain from buying tea from England.
B. England should produce more tea than it wants and sell the rest to the United States.
C. England should produce a small amount of tea and buy the rest of the tea it wants from the United States.
D. England should not produce tea, and should instead buy it all from the United States.
Answer: B
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"The Florida freeze has destroyed 40% of the orange cro
A) Yes. The freeze would not reduce the supply. B) Yes. The higher price would not reduce the demand. C) Yes. It assumes the demand curve for oranges is vertical. D) Yes. It assumes the demand curve for oranges is upward-sloping.
There are two divorce laws, A and B. Under A, it takes only one person to agree to a divorce and the divorce is granted. Under B, it takes two persons to agree to a divorce before it is granted. According to Coase,
A. there will be the same number of divorces under both laws if transaction costs are zero. B. there will be more divorces under law A. C. there will be more divorces under law B. D. taxes should be imposed on those parties who seek divorces. E. subsidies should be granted to those persons who unwillingly get divorces.
Because of the problem of second-hand smoke, if unregulated, the market for cigarettes would produce a quantity that is too ____ at a price that is too ____ when compared to the socially optimal results
a. low; low b. high; low c. low; high d. high; high
Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that
adds an additional $10 to the total cost of the standard package. What is Lionel's marginal cost of adding the shrub-trimming service to the standard package? A) $10 B) $15 C) $25 D) $40