Question

In: Economics

1. In Canada, one worker can produce either one bushel of wheat or one beer mug....

1. In Canada, one worker can produce either one bushel of wheat or one beer mug. In China, one worker can produce either two bushels of wheat or three beer mugs. Who has the comparative advantage in each good?

A. China in both goods.

B. China in wheat and Canada in mugs.

C. Canada in wheat and China in mugs.

D. Canada in both goods.

2. In the real world, specialization is rarely complete because

A. production possibilities curves are straight lines rather than curves bowed outward as viewed from the origin.

B. international law prohibits monopolies.

C. one nation's imports are necessarily another nation's exports.

D. nations normally experience increasing opportunity costs in producing more of the product in which they are specializing.

3. The major reason(s) for the current US trade deficit with China is

A. the high world demand for the dollar.

B. the low value of the yuan.

C. the current economic growth of the U.S.

D. the per capital US GDP.

E. all of the above.

4. According the analysis in the book on tariffs, tariffs would

A. raise the price of foreign goods.

B. create revenue for the domestic government.

C. limit the imports of foreign goods.

D. all of the above.

5. According to the analysis in the book on subsidies, subsides would

A. raise the price of the product because now it includes the taxes that paid for the subsidy.

B. raise the cost of production for the domestic firms.

C. make production more efficient.

D. support trading on the basis of comparative advantage.

Expert Solution

Rahul Sunny answered 6 months ago

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