Refer to Figure 2-12. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of milk?
A) They have the same advantage. B) Tahiti
C) Bora Bora D) cannot be determined
B
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Isocost curves represent
A) least cost combinations of inputs. B) combinations of inputs that can be purchased given their prices for the same total cost. C) a producers cost function. D) None of the above
The definition of cross-elasticity of demand with regard to two products X and Y is: a. the percentage change in the quantity of X demanded divided by the percentage change in the quantity of Y demanded. b. the percentage change in the price of Y divided by the percentage change in the quantity of X demanded
c. the percentage change in the price of Y divided by the percentage change in the price of X. d. the percentage change in the demand of one good (good X) divided by the percentage change in the price of another good (good Y).
A natural monopoly is defined as an industry in which one firm
a. can produce the entire industry output at a lower average cost than a larger number of firms could. b. can produce the entire industry output at a lower marginal cost than a larger number of firms could. c. is very large relative to other firms that could enter the industry. d. can earn higher profits if it is the only firm in the industry rather than if other firms also enter the industry.
In the long run,
a. monopolistically competitive firms earn a higher profit than perfectly competitive firms because monopolistically competitive firms have some monopoly power. b. monopolistically competitive firms produce a higher output than perfectly competitive firms because competition drives the perfectly competitive firms' output down. c. both monopolistically competitive and perfectly competitive firms produce where P = MC. d. both monopolistically competitive and perfectly competitive firms produce where P = ATC.