International trade
a. reduces world output of goods and services
b. lowers economic efficiency
c. allows countries to specialize in producing particular products
d. creates opportunity cost differentials in production
e. shifts each economy's production possibilities frontier inward
C
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Refer to Table 2-7. What is Mickey's opportunity cost of making a hat?
A) 1/10 of an umbrella B) 1/5 of an umbrella C) 5 umbrellas D) 10 umbrellas
Ted quits his $60,000-a-year job to be a stay-at-home dad. What is the opportunity cost of his decision?
A) the value he attributes to the joy of parenting B) at least $60,000 C) zero, since he will no longer be earning a salary D) depends on the "going rate" for stay-at-home dads
Consider a consumer who purchases two goods, X and Y. If the price of good Y falls, then the substitution effect by itself will
a. cause the consumer to buy more of good Y and less of good X. b. cause the consumer to buy more of good X and less of good Y. c. not affect the amount of goods X and Y that the consumer buys. d. result in an upward-sloping demand for good Y if the substitution effect is positive.
Which of the following statements is correct?
a. Based on studies of human decision making, most people are overconfident in their own abilities. b. Arrow's impossibility theorem disproves the median voter theorem. c. Romantic gifts are an example of adverse selection. d. An efficiency wage encourages workers to shirk.