Two nations with differing comparative advantages will be able to consume more if each produces the good for which the opportunity cost is highest and trades for the good for which opportunity cost is lowest.
Answer the following statement true (T) or false (F)
False
Each country should produce the good for which opportunity cost is lowest (for which it has a comparative advantage in producing) and trade for the good for which opportunity cost is highest.
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Generally, opportunity costs increase and the production possibilities frontier bows outward. Why?
A) Unemployment is inevitable. B) Resources are not equally useful in all activities. C) Technology is slow to change. D) Labor is scarcer than capital.
Winner-take-all markets may be applied to the
A. winnings of those who hit the lottery. B. winnings of gamblers. C. the luck of those who inherit billions of dollars. D. the compensation of CEOs of large corporations.
The U.S. government counts both cash income and in-kind transfers when determining the poverty rate.
Answer the following statement true (T) or false (F)
If the price of sugar changed in the market from 20 cents to 23 cents per pound, and Sunharvest Grocery Market didn't change the price it charges for the sugar, this behavior is likely due to
A. irrational expectations. B. large menu costs. C. discretionary policy. D. small menu costs.