Farmer Fred could grow wheat and barley. He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on an acre of his land. The price of wheat is 2.00 per bushel and the price of barley 0.80 . Show the benefits to Fred from specialization. What should he specialize in?
Question 2Which of the following was not one of Malthus assumptions?
a. stable prices
b. production with only two inputs - land and labor
c. a fixed supply of land
d. human desire to increase the population
Question 3Specialization 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 4If race-car driving is dangerous, why would any rational person choose to be a race-car driver?
Question 5If there was an increase in technology other things equal, 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 6If using the same resources, the U.S. workers can produce more of any good than Mexican workers, then the United States should produce every good.
a. True
b. False
Indicate whether the statement is true or false
Question 7Differentiate between positive and negative incentives.
Question 8Which of the following is false?
a. Accepting a reduction in current income to acquire education and training can increase future earning ability, which can raise the standard of living.
b. Improvements in literacy stimulate economic growth by reducing barriers to the flow of information and raising labor productivity.
c. One problem of providing enough education in poorer countries is that since children in developing countries are an important part of the labor force at a young age, there is a higher opportunity cost of education in terms of foregone contribution to family income.
d. Investment alone guarantees economic growth per capita.
Question 9Individuals, firms, and nations should specialize in those activities which have the highest marginal cost.
a. True
b. False
Indicate whether the statement is true or false
Question 10Would it make good sense for a community to seek to reduce its levels of pollution to zero? Why or why not?
Question 11Output per capita will tend to increase if the labor force participation rate in a country ____ or if workers put in ____ hours.
a. rises; longer.
b. rises, shorter.
c. falls; longer.
d. falls; shorter
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