The gains from trade are
a. limited to trade between nations with similar levels of wealth.
b. always based on different wage rates between nations.
c. a result of more efficient resource allocation.
d. based on the principle of absolute advantage.
e. none of the above
c. a result of more efficient resource allocation.
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Appendix: Winning an auction can be exhilarating, but it can also lead to doubt as to whether you did the right thing or not. This is called:
a. The regret effect. b. Moral hazard. c. Second wind. d. The winner's curse.
If there is shortage of loanable funds, then
a. the supply for loanable funds shifts right and the demand shifts left. b. the supply for loanable funds shifts left and the demand shifts right. c. neither curve shifts, but the quantity of loanable funds supplied increases and the quantity demanded decreases as the interest rate rises to equilibrium. d. neither curve shifts, but the quantity of loanable funds supplied decreases and the quantity demanded increases as the interest rate falls to equilibrium.
One reason stagflation is difficult to recover from is because:
A. less output requires less inputs to be hired. B. prices tend to adjust more quickly downward than upward. C. wages are sticky downward. D. input prices increase with output prices.
Cheating in a cartel is more likely to occur if the industry
A) has a large number of firms. B) has homogeneous products. C) has easily observable prices. D) has little ability to affect market prices.