Assume that two countries are considering trading with each other for the first time. Also assume that one of the countries has an absolute disadvantage in producing everything compared to the other country
How would it still be possible for these two nations to benefit from trade with each other?
The reason that it would still be beneficial for each nation to trade with each other is because trade is not dependent on absolute advantage but rather comparative advantage. That means that one nation may be operating at an absolute disadvantage vis-à-vis another nation but still have a comparative advantage in at least one good or service.
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The greater demand for paid childcare services as women's labor force participation increases represents primarily:
A. a decrease in GDP. B. a switch from market to non-market production. C. a decrease in economic activity. D. a switch from non-market to market production.
Tabitha shares a flea market booth with her sister. Her share of the rent is $150 per month. She is considering moving to her own, larger booth which she will not have to share with anyone. The larger booth rents for $450 per month
Recently, you ran into Tabitha in the grocery store and she tells you that she has rented the larger booth. Tabitha is as rational as any other person. As an economics major, you rightly conclude that A) Tabitha figures that the additional benefit of having her own booth (as opposed to sharing) is at least $300. B) Tabitha did not have a choice; her sister was overcharging her. C) the cost of having one's own booth outweighs the benefits. D) Tabitha figures that the additional benefit of having her own booth (as opposed to sharing) is at least $450.
Which of the following are NOT included among Gordon's criticisms of Friedman's fooling model?
A) Workers buy many goods on a weekly basis and thus could discover quite quickly that prices had risen. B) Workers could discover movements in the aggregate price level fairly easily. C) The model relied on a non-market-clearing explanation of the labor market. D) Workers would predict higher prices if policies that led to higher prices in the past were used again.
Suppose that Year 2 is the base year. Year 1 real GDP is
A) $200. B) $270. C) $310. D) $390.