Country A can produce 1 cello by giving up the production of 5 guitars. Country B can produce 1 guitar by giving up the production of 4 cellos. In which good does country A have a comparative advantage?
A) guitars
B) cellos
C) both goods
D) neither good
A
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The principle of comparative advantage essentially states that
A) there are some goods for which the opportunity costs of production are the same regardless of who produces them. B) some goods have high opportunity costs and low absolute costs. C) specialization can reduce output rather than increase it. D) total output of an economic system is greatest when each good is produced by those who have the lowest opportunity cost of producing the good.
Use the above table. If the marginal revenue product is $20, how many workers will the profit maximizing monopsonist hire?
A) 1 B) 2 C) 3 D) 4
A market basket:
A. looks like a really long shopping list for what firm’s typically purchase. B. includes specific goods and services in fixed quantities that roughly correspond to a typical consumer's spending. C. onlyincludes housing, food, and clothing, but not things like transportation. D. is what an economist creates in order to understand purchasing trends of households and firms.
If leisure is a normal good for a worker, and the income effect of a wage change dominates the substitution effect, then if wages increase:
a. there will be a decrease in the quantity of labor supplied by the worker. b. there will be an increase in the quantity of labor supplied by the worker. c. there will be no change in the quantity of labor supplied by the worker. d. the worker's individual supply curve will shift to the left.