What is equity, and how does it differ from efficiency?
What will be an ideal response?
Equity refers to the fair distribution of economic benefits. In economics, efficiency refers to least cost production (productive efficiency) and producing according to human preferences (allocative efficiency).
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Suppose that in Belize, the opportunity cost of producing a sailboat is 5 hang gliders. In Honduras, the opportunity cost of producing a sailboat is 8 hang gliders
a. What is the opportunity cost of producing a hang glider for Belize? b. What is the opportunity cost of producing a hang glider for Honduras? c. Which country has a comparative advantage in the production of hang gliders? d. Which country has a comparative advantage in the production of sailboats?
The fraction of each added dollar of income that is used for consumption is called the:
a. average propensity to consumer (APC). b. autonomous consumption rate (ACR). c. marginal consumption propensity (MCP). d. marginal propensity to consume (MPC).
When the exchange rate appreciates in the short run and then depreciates to its original level in the long run, it implies that the domestic money supply has:
a. temporarily risen. b. permanently risen. c. temporarily fallen. d. permanently fallen.
The following figure shows the production-possibility curves for Canada (AB) and the rest of the world (CD). Suppose Canada begins to trade with the rest of the world. If, in the international market, one bushel of corn is exchanged for one liter of maple syrup, Canada will produce ________ bushels of corn and the rest of the world will produce ________ liters of maple syrup.
A. 90; 100 B. 70; 50 C. 35; 32.5 D. 0; 0