Refer to Figure 35.3 for the production possibilities curves for the United States and Mexico. These two curves indicate that
A. The United States does not have an absolute advantage in the production of either good.
B. Mexico has an absolute advantage in the production of machinery.
C. The United States has an absolute advantage in the production of both goods.
D. The United States has a comparative advantage in the production of machinery.
Answer: C
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Because the products of firms in a monopolistically competitive market are not homogeneous, the
A) demand curve for the industry is the same for the firm. B) demand curve for the firm's product is horizontal. C) demand curve for the firm's product is downward sloping. D) demand curve for the firm's product is upward sloping.
Comparative advantage refers to the ability to produce output with fewer resources than any other country.
Answer the following statement true (T) or false (F)
One way to make consumers take a positive externality into account in their demand decision is to:
A. place a tax on the item. B. tax the producers of the item. C. subsidize the purchase of the item. D. None of these statements is true.
Knowing the price elasticity of demand is important in business because it allows a manager to determine whether:
A. a price increase will cause the quantity demanded to rise or fall. B. an increase in supply will cause total profit to rise or fall. C. a price increase will cause total revenue to rise or fall. D. a price increase will cause the demand to rise or fall.