If an individual can produce a good or service with a lower opportunity cost than another individual, then he or she is said to have the comparative advantage.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2Why are cows and chickens less prone to becoming extinct?
a. They are usually consumed in huge numbers
b. They are mainly privately owned
c. They are a part of common resources
d. Poaching these animals for their meat is banned by the government
e. They are not used for commercial purposes
QUESTION 3Free trade leads to an overall improvement in the standard of living in a country because everything is produced at the lowest possible cost.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4The existence of positive externalities in the consumption of a good implies that:
a. the social supply curve of the good lies to the right of the private supply curve.
b. the government will need to provide subsidies to ensure a socially efficient level of consumption.
c. the socially efficient quantity of the good will be less than the market equilibrium quantity.
d. the good generates an external cost.
e. the market equilibrium price of the good will be greater than the social equilibrium price.
QUESTION 5Specialization and trade do not allow individuals, firms, or even nations to acquire goods that lie beyond their production capabilities.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6When negative externalities exist in production, _____.
a. the social supply curve lies to the left of the private supply curve
b. the social supply curve lies to the right of the private supply curve
c. the social supply curve is identical to the private supply curve
d. the private demand curve lies to the right of the social demand curve
e. the private demand curve lies to the left of the social demand curve
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