Resources are used more efficiently if people, regions, and countries specialize in goods for which they have a(n):
a. disincentive to trade with others
b. higher opportunity cost.
c. absolute advantage in production.
d. comparative advantage in production.
d
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During World War II, Hitler would often order his army to hold a particular town or river "at all costs." Was this rational? If so, explain. If not, indicate which economic idea it violated
Most of the income of Americans comes from
a. transfer payments. b. individuals selling their labor services. c. the ownership of bonds and corporate stocks. d. the ownership of small businesses.
A credit union faces a(n) ________ problem when it lends funds to a customer to remodel her home and the customer then opportunistically uses the funds for a gambling trip to Las Vegas.
A. adverse selection B. moral hazard C. free-rider D. external cost
Answer the following statement(s) true (T) or false (F)
1. To make the most accurate predictions about a stock's future price, one must look at both the past pattern of prices and the current price of the stock. 2. In an efficient market, the current price reflects all available information. 3. The past performance of a stock is the best guide to future performance. 4. A speculative bubble is characterized by systematic undervaluing of stocks. 5. Efficient financial markets are called so because they produce an amount of financial products that maximizes total surplus in the financial industry.