In which of the following examples should the first country should trade the named product to the second country?
a. Canada can produce lumber products at a lower opportunity cost than the United States.
b. The United States can produce cotton fabric more efficiently than India can, but doing so hurts other U.S. industries.
c. Italy can produce leather goods more cheaply than Germany can in the absolute sense.
d. Russia can produce more oil than Norway, but it incurs higher production costs than Norway does.
a. Canada can produce lumber products at a lower opportunity cost than the United States.
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________ coordinate economic activity in which there are substantial ________
A) Markets; team production efficiencies B) Markets; transactions costs C) Firms; economies of scale D) Firms; principal-agent problems
In his book The Wealth of Nations, Adam Smith employed the example of a pin factory in order to explain what economic concept?
A) why no firm would want to hire so many workers as to experience a negative marginal product of labor B) the relationship between the marginal and average product of labor C) the law of diminishing returns D) the division of labor
Consider the two graphs above. Suppose there is an increase in the real interest rate. This would ________ the desired level of the capital stock, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A
A simplified representation of a complicated situation is:
A. econometrics. B. cutting corners. C. useless without adding fine details. D. a model.