Because of the quantity and quality of its resources, the U.S. has an absolute advantage in the production of many goods and services. Does this imply that the U.S
cannot benefit from trading with a developing country that has less productive ability? Why or why not?
The U.S. can benefit from trading with less productive countries as long as it produces the goods for which it has a comparative advantage and trades to receive the goods for which it does not.
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Which of the following best defines economics?
A) Economics teaches how to limit our wants. B) Economics studies how to choose the best alternative when coping with scarcity. C) Economics helps you earn as much money as possible. D) Economics analyzes all aspects of human behavior in general. E) Economics is concerned with prices and quantities of goods and services, both at the individual level and at the industry level.
In Great Britain, raising taxes on gasoline has increased the costs of supplying gasoline. As a result, the equilibrium quantity of gasoline ________, and the equilibrium price of gasoline ________
A) increases; rises B) increases; falls C) decreases; rises D) decreases; falls E) does not change; rises
The equation of exchange becomes the same as the quantity theory of money by assuming that the velocity of circulation ________ when the quantity of money changes and potential GDP ________ when the quantity of money changes
A) changes; changes B) changes; does not change C) does not change; changes D) does not change; does not change
Free markets produce too little output when
a. negative externalities exist b. positive externalities exist c. production uses fixed-production technology d. production uses variable technology e. the resource is exhaustible