Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. When trade opens up, the United States should produce:
A. both goods, since they have an absolute advantage in both goods, and not trade.
B. only shoes, since they have a comparative advantage in the production of shoes, and not trade.
C. apples, since they have a comparative advantage in the production of apples, and not trade.
D. only apples, since they have a comparative advantage in the production of apples, and trade for shoes.
D. only apples, since they have a comparative advantage in the production of apples, and trade for shoes.
You might also like to view...
Does a tax on sellers affect the supply curve?
A. Yes, it shifts to the left by the amount of the tax.
B. Yes, it shifts to the right by the amount of the tax.
C. Yes, it shifts up by the amount of the tax.
D. No, there is change in the quantity supplied, but the supply curve does not move.
Perfectly competitive markets:
A. are more of an idealized model economists use than a real-life occurrence. B. are the most common type of market in the United States. C. tend to have relatively few buyers. D. tend to have relatively few sellers.
Suppose a consumer's utility function is U(F0, F1) = F00.5F10.5, where F0 represents food consumed this year and F1 represents food consumed next year. For that utility function, the marginal utility of food consumed this year is 0.5 × (F1/F0)0.5 and the marginal utility of food consumed next year is 0.5 × (F0/F1)0.5. Suppose the consumer earns $100 this year and nothing in the next, food costs $1 per unit in both years, and the interest rate is 10%. How much food does she consume this year, and how much does consume tomorrow?
A. She consumes 45 units of food this year and 55 units of food next year. B. She consumes 50 units of food this year and 50 units of food next year. C. She consumes 55 units of food this year and 50 units of food next year. D. She consumes 50 units of food this year and 55 units of food next year.
State and define all the components of the GDP of an economy when it is measured by using the expenditure method