The country with a comparative advantage in the production of a good has a
A) vertical production possibilities frontier.
B) higher opportunity cost of production.
C) horizontal production possibilities frontier.
D) linear production possibilities frontier.
E) lower opportunity cost of production.
E
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Suppose that individuals with state-independent and risk-averse tastes insure each other through state-contingent trades. If there is no aggregate risk, the competitive equilibrium price will then result in actuarily fair insurance terms.
Answer the following statement true (T) or false (F)
Suppose that Jesse Eisenberg had been offered a bigger and better part in another movie and that to hire him for The Social Network, the producer had to double Jesse's pay
What incentives would have changed? How might the changed incentives have changed the choices that people made?
When there is a capacity constraint
A) firms face sunk costs when deciding whether or not to expand. B) consumers will avoid the producer and go with a firm that has extra capacity. C) firms are not maximizing their profits during high season. D) firms can use peak-load pricing to increase profits during periods of high demand.
In late 2007 and early 2008, the U.S. Federal Reserve pursued expansionary monetary policy. Which of the following will occur as a result of this monetary policy action?
A) The LM curve shifts down. B) The LM curve shifts up. C) The IS curve shifts rightward as the interest rate falls. D) The IS curve shifts leftward as the interest rate increases. E) none of the above