Country A and country B both produce shirts and shorts. Country B has an absolute advantage producing both shirts and shorts. Is there any condition under which the two countries could gain from trade?
Yes, if each has a comparative advantage producing one of the goods.
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If the government imposes an effective ________, a deadweight loss ________
A) price floor; does not occur B) price ceiling; does not occur C) price ceiling; occurs D) price support; does not occur E) Both answers C and D are correct.
The economic philosophy that favors strict limits on imports and strong support for exports is called
A) zero sum. B) autarky. C) mercantilism. D) comparative advantage. E) absolute advantage.
The incidence of a tax:
A. falls entirely on suppliers if supply is perfectly elastic. B. falls entirely on suppliers if demand is perfectly inelastic. C. falls entirely on consumers if supply is perfectly elastic. D. falls entirely on consumers if demand is perfectly elastic.
The merger of two firms selling close substitutes may lead to higher prices.
Answer the following statement true (T) or false (F)