Mexico has lower wages than the United States. Does this necessarily mean that it will have a comparative advantage in the production of everything compared to the United States?
What will be an ideal response?
Wages are only one factor in the input mix. What matters is the overall opportunity cost of production. If wages are 1/5 the in Mexico compared to what they are in the United States and workers in Mexico are 1/5 as productive as American workers this doesn't translate necessarily into a comparative advantage for Mexico. Also, goods that are produced with a lot of capital which turns out to be more expensive in Mexico and less expensive in the U.S. will tip the comparative advantage to the United States.
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A firm sells in a competitive market in which price is $10. Its marginal cost is 2 + 0.5Q. Determine the profit-maximizing level of output.
What will be an ideal response?
The Foreign Corrupt Practice Act (FCPA) is a ________ anti-corruption law that prohibits the bribery of ________.
A) United Kingdom; foreign officials B) United Kingdom; foreign officials and private citizens C) United States; foreign officials D) United States; foreign officials and private citizens
According to the graph shown, if the market price decreases (all else staying the same):
A. producer surplus would increase.
B. producer surplus would decrease.
C. total surplus would increase.
D. quantity would increase.
Which of the following is an example of a positive economic statement?
A. The economy's real output increased at about 3 percent last year and the unemployment rate decreased. B. A central bank should not print too much money because inflation could result. C. Congress should stabilize the social security system by raising taxes now. D. The government farm products surplus should be distributed to the needy.