Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. Refer to Exhibit 28-2. Which of the following is true?
A. Adam has an absolute advantage in oranges and a comparative advantage in apples.
B. Karl has an absolute advantage in oranges and a comparative advantage in oranges.
C. Karl has an absolute advantage in both apples and oranges.
D. Karl has an absolute advantage and a comparative advantage in apples.
B. Karl has an absolute advantage in oranges and a comparative advantage in oranges.
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Indicate whether the statement is true or false
If the price of grapes increases, total expenditures on grapes will decline if
a. there are few substitutes for grapes. b. the supply of grapes is inelastic. c. the demand for grapes is elastic. d. grapes are a normal good.
Suppose Vincent is willing to pay $350 to buy a new bike. Loss aversion implies that if Vincent had just bought the bike, you would:
A. have to pay him less than $350 to part with it. B. have to pay him exactly $350 to part with it. C. not be able to get him to part with it for any amount of money. D. have to pay him more than $350 to part with it.
The aggregate supply curve is
A. generally flatter as the level of resource use rises. B. never vertical, even at full employment. C. relatively flat at low levels of output. D. relatively steep at low levels of output.