Explain whether it is possible for a country to have a comparative advantage in the production of a product without having an absolute advantage in the production of that product
What will be an ideal response?
A country can have a comparative advantage without having an absolute advantage in the production of a product because having a comparative advantage means that the country can produce the product at a lower opportunity cost than another country, and having an absolute advantage means a country can produce more of the product than another country while using the same amount of resources. Having an absolute advantage is not required to have a comparative advantage.
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An economy has two workers, Jen and Rich. Everyday they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. To maximize total output, Jen should specialize in producing ________ while Rich should specialize in producing ________.
A. TVs; TVs B. radios; both goods C. radios; TVs D. TVs; radios
An example of an externality occurs when a chemical factory
A) is producing ethanol and dumps waste in a river upstream from a popular fishing spot. B) produces fertilizers that do not help plants grow. C) produces fertilizers that kill plants rather than feed them. D) overworks its employees.
Suppose your donut shop earns $25,000 in total revenues per month with explicit costs of $15,000 and opportunity costs of $8,000. Your accounting profit is
A. $2,000. B. zero. C. $48,000. D. $10,000.
Which of the following perspectives believes that both wages and prices are stuck in the immediate short run and that prices are inflexible downward but flexible upward?
A. Monetarism. B. Mainstream economists. C. Rational expectations economists. D. None of these—they all see wages and prices as flexible.