An automobile company has two factories, one in Vietnam and one in Australia each with the same number of workers. The Vietnamese factory can produce either 150 engines or 100 transmissions per day
The Australian factory can produce either 100 engines or 75 transmission per day. A) The Vietnamese factory has an absolute advantage producing both engines and transmissions.
B) The Australian factory has an absolute advantage in the production of transmissions.
C) The Vietnamese factory has a comparative advantage in the production of transmissions.
D) Which factory has an advantage is irrelevant since the theory of comparative advantage only applies to countries, not companies.
A
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"Tips" published in leading commercial or financial publications are unlikely to lead to profitable trades because
A) only wealthy individuals can buy stocks in the volume necessary to take advantage of tips. B) whatever is gained by trading on the basis of tips will be taxed away by the government. C) the news will already be reflected in the market prices of the assets. D) the news contained in the tips is usually inaccurate.
Suppose the economy currently has an inflationary gap. The Fed engages in contractionary monetary policy. The impact of contractionary monetary policy will be to
A) increase short-run aggregate supply, decrease in prices and decrease in real GDP. B) increase short-run aggregate supply, decrease prices and increase real GDP. C) decrease aggregate demand, decrease prices, and increase real GDP. D) decrease aggregate demand, decrease prices, and decrease real GDP.
If, as a result of market forces, the exchange rate changes from $1 equals 11 pesos to $1 equals 9 pesos, then the dollar has
A) appreciated. B) been revalued. C) been devalued. D) depreciated. E) There is not enough information to answer the question.
According to Adam Smith, individual self-interest...
What will be an ideal response?