Suppose Country A, a labor-abundant country, produces only wheat and cloth. The following equations illustrate the prices and costs of wheat and cloth in the country. The numbers indicate the amounts of labor and land needed to produce a unit of wheat and cloth. 'W' is the wage rate and 'r' is the rental rate of land.Price of wheat = 1w + 2rPrice of cloth = 2w + 1rIf the initial prices of wheat and cloth are $3 per unit then
A. the wage rate and the rental rate are $2 and $3, respectively.
B. the wage rate and the rental rate are $1 and $2, respectively.
C. both the wage rate and the rental rate are equal to $2.
D. both the wage rate and the rental rate are equal to $1.
Answer: D
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The demand curve for Japanese yen will shift to the right when
A) there is a decrease in demand for Japanese-made goods in the United States. B) there is no change in the demand for Japanese-made goods in the United States. C) there is a decrease in the demand for U.S.-made goods in Japan. D) there is an increase in the demand for Japanese-made goods in the United States.
Which of the following would have the lowest switching costs?
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Typically a firm's "economic profit" will be
What will be an ideal response?
If long-run economic losses are being experienced in a competitive market,
A. More firms will enter the market. B. Equilibrium price will rise as firms exit. C. Normal profit will fall to zero as firms enter. D. The market supply curve will shift to the right.