What are the implications for economic growth for countries specializing in capital goods rather than consumer goods? What is the opportunity cost of this decision?
What will be an ideal response?
All else equal, countries that specialize in capital goods will likely grow more than those that specialize in consumer goods, because specializing in capital goods will allow for more goods to be produced in the future. The opportunity cost of this decision is that the economy will experience a lower standard of living in the present than they would otherwise.
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Michael consumes only steak and lobster. Suppose that the price of steak rises. After Michael is back at equilibrium, compared to the situation when steak was cheaper, the marginal utility from the last steak will
A) have increased. B) not have changed. C) have decreased. D) not be comparable with the marginal utility before the price hike.
In the above figure, what is total profit at the profit-maximizing point?
A) $14 B) $56 C) $42 D) $70
If purchasing-power parity holds, then the value of the
a. real exchange rate is equal to one. b. nominal exchange rate is equal to one. c. real exchange rate is equal to the nominal exchange rate. d. real exchange rate is equal to the difference in inflation rates between the two countries.
The marginal productivity principle does not
A. assign higher prices to scarcer resources. B. create incentives for firms to discriminate.. C. guide firms to use society’s resources efficiently. D. distribute incomes unequally among society.