The productivity gains achieved by specialization are due to
A. comparative advantage.
B. scarcity.
C. lower opportunity costs from switching production from one good to another.
D. absolute advantage.
Answer: A. comparative advantage.
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For a cruise liner deciding how to price its rooms, if the cost of overpricing is lower than the cost of underpricing, then the management of the cruise liner should
a. Price lower than what they expect would fill capacity b. Price higher than what they expect would fill capacity c. Price such that they would expect to just fill capacity d. None of the above
If the Federal Reserve decided to raise interest rates, it could
a. buy bonds to lower the money supply. b. buy bonds to raise the money supply. c. sell bonds to lower the money supply. d. sell bonds to raise the money supply.
An example of price floor is
a. Minimum wages b. Rent controls in New York c. Both a and b d. None of the above
Putting quarters into a Las Vegas slot machine and receiving quarters out of that machine is analogous to
a. the gross domestic product b. aggregate demand c. aggregate supply d. consumption e. the circular flow of money through firms and households