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
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Total costs increase from $1500 to $1800 when a firm increases output from 40 to 50 units. Which of the following are true?
a. AC rise by $1.50 b. AC rise by $1.00 c. AC fall by $1.50 d. AC fall by $1.00
Which of the following indicates the major difference between monopolists and competitive price searchers?
a. Monopolists will always be able to make economic profit; competitive price searchers will not. b. Barriers to entry are high under monopoly but low in competitive price-searcher markets. c. Monopolists will face a downward-sloping demand curve; competitive price searchers will not. d. Unregulated monopolists will charge prices that exceed marginal cost; competitive price searchers will not.
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.
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.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower