As relative prices in various industries change due to trade, the marginal product of the mobile resources used in the expanding industry __________, and the marginal product of the mobile resources used in the contracting industry __________.
a. rises; falls
b. falls; rises
c. remains the same; remains the same
d. changes by exactly the same percentage; changes by exactly the same percentage
Ans: b. falls; rises
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If an increase in income leads to an increase in the demand curve for sailboats, this will lead to
A. higher prices of sailboats. B. lower prices of sailboats. C. a corresponding shift in the supply curve for sailboats. D. reduced output of sailboats. E. no change in the price of sailboats.
Suppose tastes are NOT monotonic anywhere. Then diminishing MRS is not consistent with convexity of tastes.
Answer the following statement true (T) or false (F)
In the case of regression with interactions, the coefficient of a binary variable should be interpreted as follows:
A) there are really problems in interpreting these, since the ln(0) is not defined. B) for the case of interacted regressors, the binary variable coefficient represents the various intercepts for the case when the binary variable equals one. C) first set all explanatory variables to one, with the exception of the binary variables. Then allow for each of the binary variables to take on the value of one sequentially. The resulting predicted value indicates the effect of the binary variable. D) first compute the expected values of Y for each possible case described by the set of binary variables. Next compare these expected values. Each coefficient can then be expressed either as an expected value or as the difference between two or more expected values.
If consumers switch away from eating margarine at the same time that the number of margarine suppliers increases, then
a. these two effects cancel each other out and there is no change in the margarine market equilibrium b. the demand curve shifts left and the supply curve shifts right c. there is a margarine price increase d. there is an excess demand for margarine e. the equilibrium quantity of margarine must increase