Gamma has $30,000 of capital per worker, while Omega has $7,500 of capital per worker. In all other respects, the two countries are the same. According to the principle of diminishing returns to capital, an additional unit of capital will ________ in Omega compared to Gamma, holding other factors constant.
A. increase output less
B. increase output by the same amount
C. increase output more
D. have no effect on output
Answer: C
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In the figure above, suppose that Mac and Izzie specialize and trade to reach point c. Mac sends Izzie
A) 12 computers in exchange for 12 TVs. B) 12 computers in exchange for 6 TVs. C) 6 computers in exchange for 12 TVs. D) 6 computers in exchange for 6 TVs.
If the price of orange juice rises 10%, and as a result the quantity demanded falls by 10%, then one can conclude that the demand for orange juice
A) is perfectly elastic. B) is inelastic. C) has a unitary elasticity. D) has a constant elasticity.
Suppose that the exchange rate between Mexican pesos and dollars is 8 pesos per dollar. If the exchange rate goes to 6 pesos per dollar, it would tend to: a. increase U.S. exports to Mexico
b. decrease U.S. exports to Mexico. c. increase Mexican exports to the rest of the world. d. decrease Mexican exports to the rest of the world.
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A. $20. B. $10. C. $5. D. None of the statements is correct.