Suppose that in Germany, the opportunity cost of producing a gallon of beer is 5 gallons of wine. In Italy, the opportunity cost of producing a gallon of beer is 3 gallons of wine
a. What is the opportunity cost of producing a gallon of wine for Germany?
b. What is the opportunity cost of producing a gallon of wine for Italy?
c. Which country has a comparative advantage in the production of beer?
d. Which country has a comparative advantage in the production of wine?
a. For Germany, the opportunity cost of producing a gallon of wine is 1/5 of a gallon of beer.
b. For Italy, the opportunity cost of producing a gallon of wine is 1/3 of a gallon of beer.
c. Germany has a comparative advantage in the production of wine.
d. Italy has a comparative advantage in the production of beer.
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The long-run average cost curve is the
A) change in total product divided by the change in capital when the quantity of labor is constant. B) change in output resulting from a one-unit increase in the quantity of capital. C) relationship between the lowest attainable average total cost and output when both the plant size and labor are varied. D) relationship between the lowest attainable average total cost and output when both the plant size and labor are fixed.
Which of the following is a necessary condition for successful price discrimination?
A) The seller must possess market power. B) Transactions costs must be zero. C) The buyer must possess market power. D) Buyers must have identical inelastic demands.
Any market that we are studying and the markets for the related inputs must all be in equilibrium at the same time. This leads to:
A. simultaneous equilibrium effects. B. partial equilibrium effects. C. general equilibrium effects. D. equilibrium-induced changes.
If the price of hot dogs were to decrease, which of the following changes would we expect to occur in the hot dog bun market?
a. The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would increase. b. The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would decrease. c. The equilibrium price of hot dog buns would increase and the quantity of hot dog buns sold would increase. d. The equilibrium price of hot dog buns would decrease and the quantity of hot dog buns sold would decrease. e. The equilibrium price of hot dog buns would stay the same and the quantity of hot dog buns sold would increase.