question
The production possibility model can be used to demonstrate the concept of opportunity cost.
answer
True
question
The text attributes the growth of economies over the last 200 years largely to:
answer
the development of markets.
question
Adam Smith argued that greater specialization and division of labor are likely to:
answer
improve standards of living
question
Suppose New Zealand uses one unit of labor to produce a kiwi and two units of labor to produce an apple. Suppose Australia uses two units of labor to produce a kiwi and one unit of labor to produce an apple. In this case, New Zealand:
answer
has a comparative advantage in producing kiwis.
question
According to Adam Smith, individuals are directed to do those things for which they have a comparative advantage by:
answer
their self interest.
question
An economy that operates inside its production possibility curve is less efficient than it would be if it were operating on its production possibility curve.
answer
True
question
Two nations with differing comparative advantages will be able to consume more if each produces the good for which the opportunity cost is highest and trades for the good for which opportunity cost is lowest.
answer
False
question
The law of one price means that prices eventually will be the same in all countries and eventually countries will not have a reason to trade.
answer
False
question
The term efficiency involves achieving a goal as:
answer
cheaply as possible.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
