Assume a candidate for president makes the argument that the United States should not trade with countries that have lower wages than we do because by doing so it will result in an export of American jobs abroad. Critically evaluate this claim
What will be an ideal response?
Wages are tied to productivity. If wages in a country are lower than in another one it is probably because productivity in that country is lower as well which offsets the advantage of having a lower wage. In addition, the comment by the candidate ignores the fact that there are other factors that can give a country a comparative advantage besides low wages. One of which might be cheap capital.
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How does the idea of independent events help in explaining the gambler's fallacy in a roulette game?
What will be an ideal response?
Over time, state and local governments have passed regulations that limit entry into certain markets. For example, in most locations beauty shops and barber shops must obtain a license to do business
The usual justification for such licensing requirements is to better ensure that only qualified people are offering such services. Considering the efficiency implications of having more or less firms serve a particular market, and the fact that consumers can "vote with their feet" (i.e., buy from a different if they aren't satisfied), is such regulation justified from an economic perspective? Why or why not?
Where the planned expenditure and the 45-degree lines intersect, the economy is ________ equilibrium, with unplanned inventory investment equal to ________
A) in, zero B) out of, zero C) in, planned inventory investment D) in, autonomous planned expenditure E) out of, autonomous planned expenditure
Imagine that there are only two nations in the world, the United States and Mexico. If Americans buy more goods made in Mexico, other things constant, the
a. U.S. demand curve for Mexican pesos will shift rightward b. U.S. demand curve for Mexican pesos will shift leftward c. U.S. supply curve of Mexican pesos will shift leftward d. U.S. supply curve of Mexican pesos will shift rightward e. U.S. supply curve of Mexican pesos will shift upward