If one country can produce a good with fewer resources than another country, this is called:
a. specialization.
b. geographic advantage.
c. comparative advantage.
d. absolute advantage.
e. free trade.
d
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Which of the following is not a short-run decision for a fisherman?
a. hire more fishing crew b. produce less fish c. buy a new fishing boat d. buy more bait e. purchase less fuel for the boat
The strategy underlying price discrimination is to
a. charge higher prices to customers who have better access to substitutes. b. charge everyone the same price but limit the quantity they are allowed to buy. c. increase total revenue by charging higher prices to those with the most inelastic demand for the product and lower prices to those with the most elastic demand. d. reduce per-unit cost to the firm by charging higher prices to those with the most inelastic demand and lower prices to those with the most elastic demand.
A person can benefit from specialization and trade by obtaining a good at a price that is
a. lower than his or her opportunity cost of that good. b. the same as his or her opportunity cost of that good. c. higher than his or her opportunity cost of that good. d. different than his or her opportunity cost of that good.
Suppose the value of the price elasticity of demand is -3. What does this mean?
A) A 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent. B) A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent. C) A 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent. D) A $1 increase in price causes quantity demanded to fall by 3 units.