Why is the PPF bowed out in the HeckscherOhlin model?
A. Capital is specific to the production of one good.
B. Labor is specific to the production of the other good.
C. There are increasing opportunity costs of producing each good.
D. Labor is not perfectly mobile between the production of the two goods.
Ans: C. There are increasing opportunity costs of producing each good.
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If the shares of stock that Doug owns go up in value from $10,000 to $15,000, then Doug's wealth:
A. does not change. B. increases by $15,000. C. decreases by $5,000. D. increases by $5,000.
Who ends up paying when sunk costs are incurred as a result of erroneous forecasting?
A) No one pays them because they are sunk. B) The consumer, because they eventually show up as higher prices. C) The government, since they fall evenly on the entire community. D) The taxpayer, because they produce a decline in assessed valuations. E) Whoever invested in the unsuccessful project.
Which of the following is a characteristic of a firm in a perfectly competitive market?
A) The firm must lower its price in order to increase quantity demanded. B) The firm cannot make a profit in the short run because it is too small a part of the total market. C) The firm can make a profit in the long run but not in the short run. D) The firm can sell as much as it wants without having to lower its price.
How does the open-economy IS-MP model incorporate net exports with a fixed exchange rate system?
What will be an ideal response?