________ suggests that with an increase in economic prosperity, world demand will shift toward luxury goods and away from staple goods.
A. The Heckscher-Ohlin theory
B. The law of convergence
C. The law of demand
D. Engel's law
Answer: D
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Which of the following is not an institutional constraint that limits the United States' production possibilities?
A. Blue laws that restrict bars and liquor stores from opening on Sunday B. Restrictions on child labor C. The fact that Americans dislike working at night or on the weekends D. Workers who are "in between" jobs
If Harry's Blueberries, a perfectly competitive firm, shuts down in the short run, Harry must pay
a. variable cost but not fixed cost b. no costs at all c. variable cost and fixed cost d. only variable cost e. only fixed cost
What is the final outcome if each firm follows its dominant strategy?
a. Each firm makes a profit of $75 M.
b. Each firm makes a profit of $100 M.
c. Each firm makes a profit of $125 M.
d. Each firm makes a profit of $175 M.
Based on the comparative cost ratios implied in Figure 35.2, it is clear that
A. The United States has a comparative advantage in baseballs and Mexico has a comparative advantage in golf shoes. B. The United States should specialize in producing golf shoes, and Mexico should specialize in producing baseballs. C. The United States should import all of its baseballs from Mexico. D. Mexico should import all of its golf shoes from the United States.