When products from a high-cost country within a customs union replace imports from a low-cost country that is not a member of the union, this is called:
a. trade creation.
b. trade diversion.
c. trade deflection.
d. trade development.
Ans: b. trade diversion.
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In the United States, individuals are forced to make choices
a. because time is scarce, though spending power is not b. because spending power is scarce, though time is not c. though neither time nor spending power are scarce d. because both time and spending power are scarce e. because living standards are low
A lowering of the legal reserve requirement makes it possible to expand the money supply
Indicate whether the statement is true or false
The production function shows
A) the incremental output gained by improving the production process.
B) the maximum output that can be produced from each possible quantity of inputs.
C) the technology used to produce output.
D) the total cost of producing a given quantity of output.
Cartel members have an incentive to cheat on the cartel because:
A. the industry profit would be higher under competitive conditions. B. the cartel price is the competitive price. C. each member's output quota is too high. D. each member's MR is not equal to the cartel's MC.