Imagine two countries, Zorba and Anduluvia. Zorba is producing everything at a lower resource cost than Anduluvia. If the two countries trade what is the reason?
What will be an ideal response?
Just because Zorba has an absolute advantage in the production of all goods does not mean that it's not beneficial for the two countries to trade. Suppose there are only two goods. Zorba may have a comparative advantage in only one of the two goods, while Anduluvia may have a comparative advantage in the other. So Zorba could be made better off by specializing in the good in which it has the comparative advantage and trading with Anduluvia for the other good.
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A speculator who incorrectly anticipates the future
A) cannot inflict a loss on others because one person's loss must be someone else's gain. B) incurs a personal loss but benefits everyone else. C) inflicts a loss on others and incurs a personal loss. D) makes a personal profit but inflicts a loss on others.
Positive analysis:
A. involves the formulation and testing of hypotheses. B. involves value judgments concerning the desirability of alternative outcomes. C. weighs the fairness of a policy. D. examines if the outcome is desirable.
In equilibrium, which of the following conditions is common to both unregulated monopoly and pure competition?
A) P = MR B) AR = ATC C) MR = MC D) MC = P
Suppose the marginal product of labor is MPN = 200 - 0.5Nwhere N is aggregate employment. The aggregate quantity of labor supplied is 300 + 8w, where w is the real wage. What is the equilibrium quantity of employment?
A. 760 B. 190 C. 380 D. 12