Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?
What will be an ideal response?
The United States might have an absolute advantage in producing a good but not a comparative advantage. In this case, the opportunity cost of producing the good in the United States is higher than in another country. Thus the United States will import the product from the other country.
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The maximin criterion can be defined as which of the following?
a. One seeks the maximum of the minimum payoffs to the various available strategies. b. One seeks the minimum of the maximum losses among the various available strategies. c. One seeks the maximum of the minimum losses to the various available strategies. d. One seeks the maximum of the maximum gains of the various available strategies.
The figure below shows the U.S. market for imported wine. For simplicity, we consider export supply curves to be flat. Chilean wine is available for $480 per barrel and French wine is available for $420 per barrel.
Suppose the United States has a tariff of $80 per barrel on imported wine. Then, the United States joins a free-trade area with Chile. At what price per barrel will the imported wines be purchased by the U.S. consumers?
A. $560 B. $420 C. $480 D. $500
By using the ceteris paribus assumption in conjunction with a model, economists can
A. hold certain factors constant. B. suspend the rationality assumption. C. avoid having their model depend on any additional assumptions. D. be sure that the model will predict correctly.
As the baby boom starts to retire, you would expect to see the
A. labor for participation rate steadily rise. B. unemployment rate steadily rise. C. labor for participation rate steadily fall. D. unemployment rate steadily fall.