The making and selling of a pencil for ten cents would likely NOT be possible, but for
A. the production possibilities curve.
B. the division of labor.
C. absolute advantage.
D. relative advantage.
Answer: B
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When the misery index is used to judge macroeconomic conditions, reducing inflation by one percentage point
A) has no effect at all on how we judge the economy's performance. B) is of less benefit to the economy than reducing the unemployment rate by one percentage point. C) gives the same benefit to the economy as reducing the unemployment rate by one percentage point. D) is of greater benefit to the economy than reducing the unemployment rate by one percentage point.
Define the terms recessionary gap and inflationary gap. Why do they occur?
As compared to the market clearing price, the total amount of consumer surplus and producer surplus is
A) greater for a government-imposed price floor that is higher than that market clearing price. B) greater for a government-imposed price ceiling that is lower than that market clearing price. C) the same as a government-imposed price floor that is higher than that market clearing price. D) smaller for a government-imposed price ceiling that is lower than that market clearing price.
With reference to the graph above, if the intended aim of the price ceiling shown was a net increase in the well-being of consumers, then positive analysis would conclude:
A. the policy was effective, since area A + C is larger than B + D. B. the policy was ineffective, since A + C + D is larger than B + E. C. the policy was effective, since area B is smaller than area D. D. the policy was ineffective, since D is larger than E.