The text argues that if avocado growers in Mexico can produce avocadoes cheaper than avocado growers in the United States, this will not reduce total jobs available in the United States. The logic underlying this argument is that
A) avocado growers in the United States did not earn much anyway.
B) avocado growers in the United States are welcome to emigrate to Mexico.
C) avocado growers in the United States will switch to specializing in a crop in which they hold the comparative advantage.
D) avocado growers in Mexico need the jobs more than Americans do.
C
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The market for airplane service on a particular route is a commonly cited example of
a. resale price maintenance. b. monopolistic competition. c. the benefits of vertical integration. d. a contestable market.
The manager of a firm receives an engineering report claiming that an additional hour of capital would add twice as much output as would an additional hour of labor. According to the firm's accountants, an hour of capital costs 3 times more than an hour of labor.
(i) Is the firm on its expansion path? Why or why not? (ii) Suppose the firm is under contractual obligations to keep its output at current levels. What long-run adjustment (if any) should the manager make in the firm's employment of labor and capital? (iii) Sketch an isoquant-isocost diagram that illustrates the situation described in part ii. Label the initial situation "A" and the post-adjustment situation "B." The scale of your diagram does not need to be accurate.
The recession of 2007-2009 made many consumers pessimistic about their future incomes. How does this increased pessimism affect the aggregate demand curve?
A) This will shift the aggregate demand curve to the left. B) This will move the economy up along a stationary aggregate demand curve. C) This will shift the aggregate demand curve to the right. D) This will move the economy down along a stationary aggregate demand curve.
When drawn against the real interest rate, the optimal investment schedule shifts to the right if
A) current total factor productivity z increases. B) current total factor productivity z decreases. C) future total factor productivity z' increases. D) future total factor productivity z' decreases.