Refer to the accompanying table. ________ has the comparative advantage in making pies and ________ the comparative advantage in making cakes. Time to Make a PieTime to Make a CakeMartha60 minutes80 minutesJulia50 minutes60 minutes
A. Martha; Martha
B. Julia; Martha
C. Martha; Julia
D. Julia; Julia
Answer: C
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Suppose that a competitive market is initially in equilibrium. Then demand increases. If some resources used in production are not available in sufficient quantities for entering firms,
a. the long-run market supply curve will be upward sloping. b. the long-run market supply curve will be perfectly elastic. c. in the long run firms will suffer economic losses, leading them to exit the industry. d. the number of firms will decrease, and the market will become a monopoly.
The ability to produce a good at a lower opportunity cost than others is known as
A) comparative advantage. B) absolute advantage. C) specialization. D) marginal cost production.
If population growth occurs while labor force participation does NOT increase,
A. a nation's labor resources will still continue to increase in both quality and quantity. B. per capita GDP is likely to increase sharply. C. economic growth will still continue because any population gain is a plus. D. there may be no increase in labor resources or economic growth.
In a perfectly competitive market the long-run demand and supply curves are Q = 12 - P and Q = 5P respectively. Producer surplus in this market equals
A) 0. B) 5. C) 10. D) It cannot be determined without more information.