Farmer Fred could grow wheat and barley. He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on an acre of his land. The price of wheat is $2.00 per bushel and the price of barley $ 0.80 . Show the benefits to Fred from specialization. What should he specialize in?
Farmer Fred could make $150 if he grew only wheat and just $100 if he grew only barley. By specializing in wheat production he will be better off. Even though he can produce more bushels of barley than he can bushels of wheat, his opportunity cost of producing wheat (the $100 income sacrificed. is lower than the opportunity cost of producing barley ($150 in sacrificed income).
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Which of the following statements is true?
A. Treasury bills mature in 2 to 10 years. B. Treasury notes mature in 13 or 26 weeks. C. Treasury bills, notes, and bonds are considered to be very safe investments. D. Municipal bonds are issued to help the federal government build new projects such as highways and stadiums.
An individual has an absolute advantage in producing pizzas if that individual:
A. has a higher opportunity cost of producing pizzas than anyone else. B. has a lower opportunity cost of producing pizzas than anyone else. C. charges the lowest price for pizzas. D. can produce more pizzas in a given amount of time than anyone else.
Which of the following describes the benefits of specialization in a free market?
The rate of interest charged for reserves in the federal funds market is the
A) federal funds rate. B) open market rate. C) required reserve rate D) discount rate.