The United States can produce 1,000 shoes if it specializes in shoe production. Alternatively, it can produce 500 shirts. Taiwan can produce 500 shoes or 200 shirts. Explain which country will specialize in shoe production and which in shirt production. What are the possible terms of trade?
The United States has the lower opportunity cost for shirts, sacrificing 2 shoes per shirt vs. Taiwan sacrificing 2.5 shoes per shirt. Taiwan will specialize in shoes. Using the opportunity cost of shirts, the U.S. will produce shirts and trade them to Taiwan for between 2 and 2.5 shoes per shirt.
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In the 1980s, the United States on net ________ foreign nations so that its private firms could absorb through domestic investment ________ goods than what was being left for them by national saving
A) borrowed from, more B) borrowed from, fewer C) lent to, more D) lent to, fewer
Which of the following can be a signal of product quality to customers?
a. Discounts offered on bulk purchases of the product. b. Gift of complementary products offered to purchasers. c. The information provided by the salesperson about the product. d. A warranty provided along with the product.
Suppose that Dianne Lindsay spends all her income on two goods, A and B, in a manner in which their marginal utility to price ratios are equal, i.e., MUa/Pa = MUb/Pb. If at that time the price of A is higher than the price of B, then she
a. should increase her consumption of A and decrease her consumption of B because the marginal utility of A is higher b. is already maximizing her total utility and should make no change c. should increase the consumption of B and decrease the consumption of A because the price of B is lower d. should increase the consumption of both A and B since the ratios are equal e. has made an irrational choice
"The money and resources currently being devoted to the War on Terrorism reduces the quantity of other goods that we are able to supply." This statement most clearly illustrates which of the following?
What will be an ideal response?