The limits of the terms of trade are determined by the:

The limits of the terms of trade are determined by the:
 a. distribution costs in each country.
  b. stock of foreign exchange in each country.
  c. average total costs of producing the commodities in each country.
  d. opportunity costs in each country.
  e. currency exchange rate between the trading partners.

QUESTION 2

Which of the following will result from an epizootic affecting sheep reared for wool?
 a. The epizootic would lower people's preference for woolen clothes.
  b. The price of new woolen clothes would rise.
  c. The epizootic would lower people's preference for synthetic coats.
  d. The production of new woolen clothes would rise.

QUESTION 3

A firm maximizes its profit at a level of output, where the additional revenue earned by selling an extra unit of the output is equal to the additional cost borne for producing that extra unit of the output.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

Assume that all of the inputs used in a particular perfectly competitive industry can be increased without bidding up their prices. The long run supply curve for that industry will be:
 a. vertical.
 b. upward sloping.
 c. horizontal.
 d. downward sloping.

QUESTION 5

The terms of trade is defined as:
 a. the quantity of inputs sacrificed to produce each unit of a good.
  b. the quantity of one good that is exchanged for a quantity of another good.
  c. the ratio of the total cost of production of individual traders.
  d. the marginal cost of producing one good as a percentage of the marginal cost of another good.
  e. the ratio of total exports of a nation to its total production.