Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Lavaland can produce 16 units of food per year or 8 units of clothing. Which of the following is true?
a. Iceland has an absolute advantage, but not a comparative advantage in producing food.
b. Iceland has a comparative advantage, but not an absolute advantage in producing food.
c

Lavaland has both a comparative and absolute advantage in producing clothing.
d. Lavaland has a comparative advantage, but not an absolute advantage in producing clothing.


a

Economics

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Which of the following indicates the major difference between monopolists and competitive price searchers?

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Economics

Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that

a. people respond to incentives. b. rational people think at the margin. c. people face tradeoffs. d. improvements in efficiency sometimes come at the expense of equality.

Economics

Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.

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Economics