Which of the following is an example of lower production costs brought about by the use of technology?
a) the delivery costs of gasoline to the consumer by diesel trucks
b) the use of e-mail to replace slower surface mail
c) the making of breads and pastries in local shops rather than large bakeries
d) the importing of fresh vegetables from South America rather than using canned vegetables
Ans: b) the use of e-mail to replace slower surface mail
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If the marginal rate of transformation is constant what can be said of the shape of the production possibilities frontier and why?
What will be an ideal response?
Buying a house during a recession may be a good idea if your job is secure because the Federal Reserve often
A) raises interest rates during recessions. B) lowers interest rates during recessions. C) sells Treasury bills to help the housing market. D) lowers income taxes during recessions.
According to the rational expectations theory the rate of inflation largely depends on
A. business expectations of interest rate levels. B. business expectations about international trade. C. what people expect to happen to prices. D. the unemployment rate.
Examples of comparative advantage often begin with two countries that each produce the same two goods
Each country is then shown to have a comparative advantage in producing the good it can produce at a lower opportunity cost, and specializes in the production of the good for which it has a comparative advantage. How do these examples prove that both nations are made better off as a result of trade than they would be without trade?