A country's newest ruler has decided the country will become self-sufficient and ceases trade with the rest of the world. The likely outcome of this action will be that the country's citizens will be:
A. better off than before only if they have the absolute advantage in the production of most goods they consume.
B. better off than before only if they have the comparative advantage in all goods
C. forced to consume less than before if they possessed a comparative advantage in the production of a good.
D. better off than before if they possess an absolute advantage in the production of a good.
Answer: C
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In the above figure, the economy is initially at point B. Then the price level falls by 10. The wealth effect will help
A) move the economy to point A. B) move the economy to point C. C) move the economy to point D. D) keep the economy to point B.
If Sam can chop up more carrots per minute than Joe can, then
a. Joe has an absolute advantage in carrot chopping b. Joe must have a comparative advantage in carrot chopping c. Sam has an absolute advantage in carrot chopping d. Sam must have a comparative advantage in carrot chopping e. we can conclude nothing about absolute advantage
Suppose that a large dairy farmer is able to raise the market price of milk by withholding milk supply from the market. In this instance,
a. the milk market is perfectly competitive b. buyers will decrease their demand for milk c. buyers will increase their demand for milk d. the milk market is imperfectly competitive e. the milk market will collapse in the long run
If total utility is decreasing, then marginal utility is
A) negative. B) positive. C) zero. D) increasing.