Which of the following is designated by points C’ and C in Exhibit 4?
a. Calvin and Wendy each benefit by specializing and trading their goods.
b. By specializing in food, Wendy can produce and trade 13 pounds of food per day.
c. In their exchange, the price of Wendy’s food is higher than the price of Calvin’s cloth.
d. Through trade, Wendy’s food production drops from 10 pounds to 7 pounds per day.
a. Calvin and Wendy each benefit by specializing and trading their goods.
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Tom and Jerry are the only members of society. The table above shows their marginal benefits from defense satellites, a public good. If the marginal social cost of a satellite is $54, the quantity of satellites provided by a competitive market is
A) 0. B) 1. C) 2. D) 3.
Suppose Brazil has a comparative advantage in coffee production and Mexico has a comparative advantage in tomato production. If these two countries specialize and trade, which of the following is true?
A. Brazilian tomato producers are worse off. B. Brazilian coffee producers are worse off. C. Mexican tomato producers are worse off. D. Mexican coffee producers are better off.
Suppose the price level is unchanged and real GDP decreases. Then
A) nominal GDP must decrease. B) nominal GDP must remain unchanged. C) nominal GDP must increase. D) none of the above are true.
In a Stackelberg oligopoly
A) the leader moves first, and the follower chooses its price in the second stage of the game. B) the leader moves first, and the follower chooses its output in the second stage of the game. C) both firms act simultaneously, but one chooses price and the other output level. D) there is no Nash equilibrium.