Gains from trade can be realized if each country specializes in the production of a good in which it has a comparative advantage.
a. True
b. False
Indicate whether the statement is true or false
Question 2How can market failure occur in the market for hybrid automobiles? What could the government try to do to improve the situation?
Question 3The GI Bill provided educational opportunities to many young men returning from military service. Using a production possibilities curve, demonstrate how the GI Bill affected economic growth and explain your answer.
Question 4It has been generally observed that most trade in the world occurs between a developed and a less-developed nation rather than between industrial or developed nations.
a. True
b. False
Indicate whether the statement is true or false
Question 5How do price controls undermine the market as a communication device?
Question 6Enforcement of property rights is likely to result in:
a. more incentives to invest.
b. lower rates of economic growth.
c. political instability.
d. corruption.
Question 7Specialization and trade can take place only if a country is endowed with more of something compared to other countries.
a. True
b. False
Indicate whether the statement is true or false
Question 8Prices communicate information about the relative value of resources in the marketplace. Which of the following would cause the marginal value and, hence, the price, of oranges to rise?
a. A freeze wipes out half of the Florida citrus groves.
b. Orange juice is shown to reduce blood cholesterol levels.
c. The price of grape, cranberry, and pineapple juice falls dramatically.
Question 9If people began to retire at a later age and there was an increase in the capital stock, real GDP growth would ____ and real GDP growth per capita would ____.
a. increase; increase.
b. increase; be indeterminate.
c. decrease; decrease.
d. decrease; be indeterminate
Question 10If 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 11Maggie is a potter who likes to dig her own clay for producing pots, cups and other ceramic items. She is aware of two places where she can obtain the right clay for her work. The first field is quite close, just at the edge of town. The second field is 15 miles away and (since there are no access roads) requires a half-day of travel just to get there. Compare the opportunity cost of producing pots using clay from each of these fields.
Question 12If there was both an increase in technology and an increase in labor force participation, real GDP growth would ____ and real GDP growth per capita would ____.
a. increase: increase
b. be indeterminate; be indeterminate
c. be indeterminate; decrease
d. increase; be indeterminate
Question 13Free 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
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