Countries should specialize and import goods in which they have a comparative disadvantage.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2The production function shows:
a. the total cost incurred to produce a certain level of output.
b. the changes in cost incurred as output level varies.
c. the relationship between inputs used and output produced.
d. the impact of a change in production on the firm's revenues.
QUESTION 3The entry of new firms into an industry lowers the economic profit of the existing firms.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4A natural monopolist will voluntarily choose to produce at the point where P = MC.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5International trade permits greater consumption than would be possible from the domestic production alone.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6If decreasing long-run average cost is inherent in an industry's technology, then only one supplier can satisfy the entire market.
Indicate whether the statement is true or false
QUESTION 7A positive economic profit signals that the investors of a firm should divert their funds to alternative ventures.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 8A natural monopoly exists when one large firm can produce a product at a lower per unit cost than can smaller firms.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 9If a laborer in Mexico can produce 2 bushels of wheat or 4 bushels of corn in a day, the opportunity cost of producing wheat is 4 bushels of corn.
a. True
b. False
Indicate whether the statement is true or false
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