Which of the following is TRUE with respect to specialization?
A. Individuals and nations specialize in their areas of comparative advantage in order to reap the gains of specialization.
B. With a given set of resources, specialization results in higher output.
C. Adam Smith in The Wealth of Nations referred to specialization and division of labor.
D. All of these are correct.
Answer: D
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A possible reason to impose a protectionist policy such as a tariff is to
A) slow domestic production. B) protect domestic workers from foreign competition. C) aid other nations in developing their own industries. D) increase the welfare of domestic consumers.
Define price elasticity of demand. What does it measure?
What will be an ideal response?
A falling average cost implies that
a. marginal cost is above average cost b. marginal cost is below average cost c. marginal cost is equal to average cost d. none of the above
Which one of these is counted in GDP?
A. The purchase of a used car B. The purchase of 100 shares of IBM C. Government spending on a NASA project to go to Venus D. The purchase of a 10-year-old office building