In order for mutually beneficial trade to occur between two otherwise isolated nations
A. each nation must be able to produce at least one good absolutely cheaper than the other.
B. each nation must be able to produce at least one good relatively cheaper than the other.
C. one nation's production must be labor-intensive while the other nation's production is capital-intensive.
D. each nation must face constant costs in the production of the good it exports.
Answer: B
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If a good is normal and its price increases,
a. the income effect will be positive and the substitution effect will be positive. b. the income effect will be negative and the substitution effect will be negative. c. the income effect will be positive and the substitution effect will be negative. d. the income effect will be negative and the substitution effect will be positive.
Banks try to keep their level of excess reserves low because
a. the Fed charges a penalty for holdings of excess reserves. b. they are concerned that the money multiplier will become too large. c. they wish to maximize profits. d. bank regulators levy fines on the amount of excess reserves.
Which of the following is a component of money?
A) bonds B) saving C) income D) stocks E) none of the above
Consumers who are more sensitive to changes in price suffer a greater loss of consumer surplus from any given price increase
Indicate whether the statement is true or false