Explain Ricardo's theory of comparative advantage
What will be an ideal response?
Specialization and free trade will benefit all trading partners, including those that may be absolutely more efficient producers.
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Real business cycle theorists agree with new classical economists that
a. agents maximize utility and form expectations rationally. b. the labor market do not clear. c. imperfect information plays a big role in business cycles. d. Both a and c
If, at its profit-maximizing output level, the price of the good is less than average variable cost, the firm should shut down immediately
Indicate whether the statement is true or false
If a resource is in fact becoming scarcer, then one should expect
A. the price of the resource to rise. B. less demand for the resource as people try to conserve. C. greater supply as people reduce inventories before it is all gone. D. the quantity supplied to increase.
In a perfectly competitive industry, which of the following is a market signal to resource owners?
A) economic profits B) quality of goods C) the level of exports in the country D) the level of subsidies the industry receives