The economic principle that states that individuals or nations can gain by specializing in the production of goods that they produce cheaply and exchanging for other desired goods that they could only produce at a higher cost is
a. the law of absolute advantage.
b. the law of comparative advantage.
c. the law of production possibilities.
d. the exchange maximum principle.
B
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The government can use taxes to
A) change production in a market with an external cost to the efficient amount. B) change production in a market with an external benefit to the efficient amount. C) increase production. D) decrease price.
Laws restricting gambling can be seen as an attempt to limit the consequences of:
A. anchoring and adjustment. B. status quo bias. C. impulse control problems. D. regression to the mean.
Which of the following financial instruments is used mainly to transfer risk?
A. Options B. Asset-backed securities C. Stocks D. Bonds
Answer the following statements true (T) or false (F)
1. The budget line shows the various incomes that an individual can earn from different jobs. 2. The fundamental economic problem faced by a society is that productive resources are so varied and versatile, that it is hard to decide what to do with them. 3. The resource category called "land" includes forests, animals, and water resources. 4. When economists talk about the capital resources in the economy, they are referring to the amount of money circulating in the economy.