Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 3.1 shows how much of each good Jesse and April can paint in one hour. April's opportunity cost of painting one kite is painting
A) 1/12 of a snowboard. B) 1/4 of a snowboard.
C) 3 snowboards. D) 4 snowboards.
B
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Labor productivity is defined as
a. the amount of output a typical worker turns out in an hour of work. b. the amount of output the best worker turns out in a day of work. c. the amount of output improvement in a year of work. d. the amount of average output improvement for a team in a year of work.
Which of the following are potential problems faced by a firm that wants to provide warranties for its lawnmowers? (Select all that apply.)
a. A moral hazard problem might arise, in that homeowners may be less careful with the mower, since they can always return it if it breaks. b. The warranty may select for homeowners that don't have a lot of mowing to do, or have smooth lawns, because they won't have to pay as much for a warranty. c. The warranty will increase demand by assuring customers of the product's quality. d. The warranty will reduce demand because only makers of low-quality goods would need to reassure consumers in this way.
A small amount of international debt can become a heavy burden on a developing economy if
a. interest payments are a large percentage of export revenues b. a trade surplus develops c. the economy grows rapidly d. the country becomes more developed e. total borrowings exceed the $50 million level fixed by the IMF
If UIP holds, the foreign interest rate is 6%, and the home currency is expected to appreciate by 2%, then the home interest rate is:
a. 10% b. 8% c. 4% d. 3%