An economy has two workers, Paula and Ricardo. Every day they work, Paula can produce 4 computers or 16 shirts, and Ricardo can produce 6 computers or 12 shirts. To maximize total output, Paula should specialize in producing ________ while Ricardo should specialize in producing ________.
A. shirts; shirts
B. computers; shirts
C. computers; computers
D. shirts; computers
Answer: D
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Explain the following statement: "People hate taxes primarily because of income effects while economists hate taxes primarily because of substitution effects."
What will be an ideal response?
Which of the following can prevent markets from reaching efficiency? I. price regulations that cap the price that may be charged II. increasing marginal cost III. monopoly
A) I only B) I and II C) II and III D) I and III
Command systems in the Soviet Union and Eastern Europe failed primarily because of coordination and incentive problems.
Answer the following statement true (T) or false (F)
Referring to Figure 18.2, if the exchange rate is currently 11 pesos per dollar, then we expect the dollar to ________ and the peso to ________.
A. depreciate; depreciate B. depreciate; appreciate C. appreciate; depreciate D. appreciate; appreciate