You are the Minister of Trade for a small island country with the following annual PPC:
You are negotiating a trade agreement with a neighboring island with the following annual PPC:
As soon as you see the other island's PPC, you realize there are:
A. no gains from trade because you both have the same comparative advantage.
B. gains from trade because your island has a comparative advantage in coconuts.
C. no gains from trade because the other island has an absolute advantage.
D. no gains from trade because there is no difference in your ability to harvest coconuts.
Answer: B
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In defining the ____ from the railroad industry, economic historians measure the extra real GNP that can be attributed to this innovation
a. profits b. social savings c. wage income d. balance of trade
Which of the following is a reason there are divisional conflicts over the transfer price?
a. the manager of the upstream division prefers a transfer price that is too high b. the manager of the downstream division prefers a transfer price that is too low c. the corporate headquarters does not have enough information to determine the correct transfer price d. all of the above
Copyrights and patents are examples of barriers to entry that give firms monopoly pricing powers
a. True b. False Indicate whether the statement is true or false
By purchasing shares in a mutual fund that holds a portfolio of stocks, a person can
a. benefit from fundamental analysis, since the mutual fund requires its shareholders to perform fundamental analysis on their own. b. benefit from fundamental analysis, since the mutual fund hires one or more individuals to perform fundamental analysis for the fund. c. eliminate market risk. d. reduce the standard deviation of his or her portfolio to zero.