The theory of comparative advantage implies that
B. two countries can have a comparative advantage in production of the same good.
C. the world gains from trade since it allows production to move to the countries where their opportunity cost is lowest.
D. the country with the comparative advantage also has an absolute advantage.
C. the world gains from trade since it allows production to move to the countries where their opportunity cost is lowest.
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Which of the following is true of dummy variables?
A. A dummy variable always takes a value less than 1. B. A dummy variable always takes a value higher than 1. C. A dummy variable takes a value of 0 or 1. D. A dummy variable takes a value of 1 or 10.
People derive utility in their lives from consuming goods (all other goods), g, and clean air (measured as the number of particulates removed per m3), a, as measured with the utility function U(g,a) = g0.6a0.4. The price index of consumer goods equals $20 per day. Income equals $1000. What is likely to happen to the number of asthma cases as the price of clean air (abatement cost) increases from
$10 to $20? A) Asthma cases decrease because the particulates per m3 increase by 2 units. B) Asthma cases increase because the particulates per m3 decrease by 2 units. C) Asthma cases increase because the particulates per m3 increase by 2 units. D) There is not enough information to answer this question.
Refer to figure 4-17. At a price of
Interest rates fall and investment falls. Which of the following could explain these changes?
a. The government goes from a surplus to a deficit. b. The government repeals an investment tax credit. c. The government replaces a consumption tax with an income tax. d. None of the above is correct.