A country is most likely to have a comparative advantage in the production of cars if:
A. its citizens prefer driving cars to other forms of transportation.
B. it imports most of the raw materials necessary to produce cars.
C. it has strict environmental protection laws governing automobile emissions.
D. it has a relative abundance in the natural resources needed to produce cars.
Answer: D
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If the dollars-per-euro spot rate is 0.7750 and the 3 month forward rate is 0.7800, what is the amount of the standard forward discount or premium?
A) 2.58% B) 2.56% C) 7.69% D) 7.74%
Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The opportunity cost of one tomato in Country B is:
A. 108 bananas. B. 18 bananas. C. 6 bananas. D. 3 bananas.
Suppose you operate in a monopolistically competitive market. If you sell your good at a price of $20 and your average cost of production is $15:
A. your market may be in long-run equilibrium. B. you cannot be in short-run equilibrium. C. you should expect competing firms to enter your market and shift the demand curve for your good to the left. D. you should expect competing firms to enter your market and shift the demand curve for your good to the right.
An efficiency wage
A) is higher than the market wage and tends to increase productivity. B) is lower than the market wage and tends to increase productivity. C) is higher than the market wage and tends to decrease productivity. D) is lower than the market wage and tends to decrease productivity.