When the principle of comparative advantage determines trade, then a country will
A. specialize only in that good with the highest opportunity cost.
B. specialize only in that good where production costs are more than average total costs.
C. specialize only in goods with the lowest opportunity costs.
D. specialize only in that good where output is less per worker hour than another country.
Answer: C
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Which of the following is a positive statement?
A) Taxes should be lower because then people get to keep more of what they earn. B) My economics class should last for two terms because it is my favorite class. C) A 10 percent increase in income leads to a 4 percent increase in the consumption of beef. D) Given their negative impact on productivity, the government should eliminate labor unions.
If a firm in a competitive industry is making no profit but still producing, it must be the case that
a. MC = MR > ATC b. MC = MR < ATC c. MC = ATC > MR d. MC = MR = ATC e. this situation is not possible
When policymakers are considering a particular action, they can use consumer surplus as a(n)
a. objective measure of the benefits to buyers as determined by policymakers. b. measure of the benefits to buyers as the buyers perceive them. c. potentially flawed measure of the benefits to buyers if the buyers are not rational. d. Both b) and c) are correct.
When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the
A) substitution effect. B) income effect. C) price effect. D) output effect.