Fab Tools Inc can produce 150 widgets and 100 axes in a month. Another company AllMyTools Inc can produce 80 widgets and 50 axes per month. Which of the following statements is true?
a. Fab Tools has an absolute advantage in production of both goods.
b. AllMyTools has an absolute advantage in production of both goods.
c. AllMyTools has a comparative advantage in production of axes.
d. Fab Tools has a comparative advantage in production of widgets only.
A
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Direct investment and security purchases are included in
A) current account items. B) capital account items. C) basic balance account items. D) unilateral transfers.
Economists collect data on prices in every country and develop an index that describes the overall difference in prices between countries called the:
A. purchasing power parity index. B. price parity purchasing index. C. consumer price index. D. consumer purchasing power index.
Which of the following is a consequence of competition?
A. An unrelenting squeeze on prices and profit. B. Positive economic profit in the long run. C. Price-gouging behavior. D. Elimination of the most efficient firms.
If a monopolist wants to increase the amount it sells, it
A) will keep the price the same. B) must lower the price on all units. C) must accept lower profits. D) must lower the cost of production.