Refer to Figure 2-2. The linear production possibilities frontier in the figure indicates that
A) it is progressively more expensive to produce orchids.
B) the tradeoff between roses and orchids is constant.
C) Vidalia has a comparative disadvantage in the production of roses.
D) Vidalia has a comparative advantage in the production of orchids.
B
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What will be an ideal response?
In the long run, which of the following is not a problem for a monopolist earning economic profit?
a. other firms have an incentive to create substitutes for the monopolist's product b. technological change tends to break down barriers to entry c. patents expire, licenses must be renewed, and new sources of essential resources may be discovered d. government often decides to regulate monopolies e. all profit will gradually be converted to consumer surplus
The demand for capital, as an input in production, will decrease if:
a. labor and capital are substitutes in production and the supply of labor decreases. b. the demand for the final good it produces increases. c. capital becomes more productive. d. the price of capital decreases. e. labor and capital are substitutes in production and the wage rate declines.
In a competitive industry in the long-run, it is likely that
A. all firms giving their best effort will have the same LAC regardless of location or the unique skills of some workers. B. only one large efficient firm can survive. C. firms with the advantage of location or an especially skilled work crew will be the lone survivors in equilibrium. D. the firms with the poorest location will be the lone survivors in equilibrium because their location cost will be lowest.