Crtically evaluat the following statement. "It is possible to calculate comparative advantage even when prices are not known."
What will be an ideal response?
This statement is true. Opportunity cost is all that is required. And of course opportunity cost simply refers to what is given up in order to produce something. The item given up doesn't have to have a monetary price tag in order for opportunity cost to be calculated.
You might also like to view...
Which of the following, if implemented in the Solow growth model, would not lead to a steady state?
A) A higher population growth rate. B) Decreasing returns to scale in production. C) A savings rate that decreases as income increases. D) A constant marginal product of capital.
A weaker peso, relative to the US dollar, causes the demand for US exports to ______ and the demand of Mexican imports to______
a. Increase; Decrease b. Decrease; Increase c. Increase; Increase d. Decrease; Decrease
The real wage is the wage:
A. measured in terms of purchasing power. B. employers are required to pay workers. C. measured in current dollars. D. required to maintain a minimum standard of living.
Suppose a monopolist has costs such that when output is 500 units per hour, average costs are $3. If the monopolist is regulated by a policy of average-cost pricing, the monopolist will charge a price of:
A. $3. B. $3 only if the quantity demanded is 500 units per hour at a price of $3. C. $3 only if the quantity demanded is greater than 500 units at a price of $3. D. $3 only if the quantity demanded is less than 500 units per hour at a price of $3.