Suppose in India, one unit of labor can produce 330 pounds of rice or 110 shirts in a year. In China, one unit of labor can either produce 400 pounds of rice or 200 shirts in a year. Which of the following statements is true?
a. India has a comparative advantage in the production of rice.
b. China has a comparative advantage in the production of rice.
c. India has an absolute advantage in the production of shirts.
d. India has an absolute advantage in the production of rice.
a
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Producer surplus definitely exists when the
A) price exceeds marginal benefit. B) price exceeds marginal cost. C) marginal cost exceeds the price. D) marginal benefit exceeds the price. E) marginal benefit exceeds the marginal cost.
Which of the following helps explain why depositors sometimes put their funds in demand deposits rather than NOW accounts?
A) Demand deposits pay interest, whereas NOW accounts do not pay interest. B) Businesses may not hold NOW accounts. C) Checks may be written against demand deposits, but not against NOW accounts. D) Demand deposits are more liquid than NOW accounts.
The production possibilities frontier in the one-period model is a
A) behavioral relationship between consumption and leisure. B) behavioral relationship between consumption and government spending. C) technological relationship between consumption and leisure. D) technological relationship between consumption and government spending.
A natural monopoly is producing an output level of 1,000 units per day. If the monopoly is broken up into 5 firms, then average total cost for each of the 5 firms
a. will exceed the monopolist's average total cost b. will equal the monopolist's average total cost c. will fall below the monopolist's average total cost d. may equal or fall below the monopolist's average total cost e. may equal or exceed the monopolist's average total cost