Assume that China has a comparative advantage in producing corn and exports corn to Japan. We can conclude that
A) China also has an absolute advantage in producing corn relative to Japan.
B) China has a lower opportunity cost of producing corn relative to Japan.
C) Japan has an absolute disadvantage in producing corn relative to China.
D) Labor costs are higher for corn producers in Japan than in China.
Answer: B
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Deviations from PPP
A) may be due to the differential speed of adjustment between exchange rates and prices. B) may occur when international trade involves lags between order and delivery. C) may appear during periods dominated by news or unexpected events. D) All of the above.
When one examines the nature of a tax in relation to the incomes of people paying the tax, it is possible to
a. calculate aggregate impact b. determine relative burden c. identify poll tax levels d. determine corporate responsibility e. find customs duties
When a country specializes in the production of a good that is relatively cheaper for it to produce than other goods, it is because of:
A) the foreign-trade multiplier. B) comparative advantage. C) nontariff barriers. D) absolute advantage.
Most academic studies show that Head Start benefits
A. are suspect due to the inability to test young children. B. slowly evaporate over two or three years and are not seen in testing of high school age children. C. don't exist at all, even for the children in the program. D. can be observed to last well beyond graduation from college.