Which of the following best explains the effect of specialization on production as shown in Exhibit 5?
a. Specialization provides more goods overall to be divided between Techland and Grainsville.
b. By specializing in computers, the people of Techland no longer have grain to consume.
c. Grainsville is an agrarian society and as such does not have a need for computers.
d. Computers are more expensive than grain, so the people of Techland benefit most.
a. Specialization provides more goods overall to be divided between Techland and Grainsville.
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The price elasticity of demand for Stork ice cream is -4. Suppose you're told that following a price increase, quantity demanded fell by 10 percent. What was the percentage change in price that brought about this change in quantity demanded?
A) 40 percent B) 25 percent C) 2.5 percent D) 0.4 percent
Which of the following is the term used when average costs go down as the measure of output goes up?
a. Relative advantage b. Absolute advantage c. Comparative advantage d. Economies of scale
If a firm is losing money, in the short run it
A. will definitely operate. B. will definitely shut down. C. may operate if covering variable costs. D. will definitely go out of business.
Assume the price of a product sold by a purely competitive firm is $5. Given the data in the accompanying table, at what output is total profit highest in the short run?OutputTotal Cost20$702575308535100401254515550190
A. 20 B. 30 C. 50 D. 40