The principal concept behind comparative advantage is that a nation should
A. concentrate production on those products for which it has the lowest domestic opportunity cost.
B. maximize its volume of trade with other nations.
C. strive to be self-sufficient in the production of essential goods and services.
D. use tariffs and quotas to protect the production of vital products for the nation.
Answer: A
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Refer to Table 4-8. If a minimum wage of $10.50 is mandated there will be a
A) surplus of 30,000 units of labor. B) shortage of 60,000 units of labor. C) surplus of 60,000 units of labor. D) shortage of 30,000 units of labor.
In swap transactions, the trader is interested in
A) the difference between spot and forward rates. B) only the spot rate. C) only the forward rate. D) both the spot and deposit interest rate.
Recent studies on the effectiveness of fiscal policy tend to suggest that increases in government spending are more effective than tax cuts in stimulating real GDP
a. True b. False Indicate whether the statement is true or false
When policy makers are deciding where to place the statutory incidence of a tax, it is helpful to remember that:
A. it will have no effect on the economic incidence of the tax. B. the economic incidence will fall to the more-elastic party. C. it will largely determine the economic incidence of the tax. D. it will have a large impact on efficiency of the tax.