Critically evaluate the following statement. "If a country has an absolute advantage in the production of everything it necessarily follows that it will have a comparative advantage in the production of everything."
What will be an ideal response?
This is patently false. Absolute advantage only implies that a good can be produced with fewer inputs versus a rival. Comparative advantage means that a good can be produced at lower opportunity cost than a rival. That means that a rival could have an absolute disadvantage in the production of a good or a service and still have a comparative advantage because of its lower opportunity costs.
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To internalize a negative externality: a. a producer's costs could be reduced by an amount equal to the external cost resulting from the production of a good. b. a producer's costs could be increased by an amount equal to the external cost resulting from the production of a good. c. a producer could receive a subsidy equal to the external cost resulting from the production of a good
d. None of the above are correct.
As the U.S. labor force grows and the nation's capital stock is augmented by investment, the
a. price level will rise. b. aggregate supply curve shifts inward. c. aggregate supply curve shifts outward. d. aggregate supply curve becomes steeper.
In the long run, when there is immigration of labor and all domestic factors of production are mobile:
a. resources move out of the laborintensive industry into the other sectors of the economy. b. the excess labor cannot be absorbed into the economy, and eventually workers will seek to emigrate. c. the excess labor is absorbed, but it raises the unemployment rate and drives down wages, and the owners of capital are the clear winners. d. the capitallabor ratio in each industry is unchanged, and the additional labor in the economy is fully employed.
Each of the following except _____ takes a liberal position with respect to poverty.
A. Charles Murray B. Barbara Ehrenreich C. Lisabeth and Daniel Schorr D. Frances Fox Piven