Suppose the rest of the world experiences a recession that causes a reduction in foreign income (Y*). From the domestic economy's perspective, this reduction in foreign income will cause which of the following as the domestic economy adjusts to the drop in Y*?
A) a reduction in income and a reduction in imports
B) a reduction in imports and an increase in net exports
C) the NX line to shift up
D) an ambiguous effect on net exports
A
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With its current levels of input use, a firm's MRTS is 3 (when capital is on the vertical axis and labor is on the horizontal axis). This implies
A) the firm could produce 3 more units of output if it increased its use of capital by one unit (holding labor constant). B) the firm could produce 3 more units of output if it increased its use of labor by one unit (holding capital constant). C) if the firm reduced its capital stock by one unit, it would have to hire 3 more workers to maintain its current level of output. D) if it used one more unit of both capital and labor, the firm could produce 3 more units of output. E) the marginal product of labor is 3 times the marginal product of capital.
Which of the following observations is true? a. Monopolistically competitive sellers are price takers
b. Monopolistically competitive sellers treat price in the same manner as in perfect competition. c. Monopolistically competitive sellers regard price as a given by market conditions. d. Monopolistically competitive sellers are price makers.
A country is most likely to have a comparative advantage in the production of cars if:
A. it has strict environmental protection laws governing automobile emissions. B. its citizens prefer driving cars to other forms of transportation. C. it imports most of the raw materials necessary to produce cars. D. it has a relative abundance in the natural resources needed to produce cars.
Near an ocean beach, a high-rise building is being constructed that will block the scenic view of the ocean by the residents of a low-rise building. The Coase theorem suggests that this type of dispute between the owners of high-rise and low-rise buildings would best be resolved by:
A. city government officials. B. a government fine for the builder of the high-rise. C. a zoning ordinance restricting high-rise buildings. D. the owners themselves.