Question

. Determine if the following claims are true or false (or argue that they can be sometimes true and sometimes false). justify each answer you give with at most three sentences.

(a) When choosing the optimal amount of time to study for an exam, students with a higher marginal rate of transformation (i.e. students that get more points per each additional hour of study)should always devote more time to studying.

(b) If England has comparative advantage in the production of cloth and Portugal has comparative advantage in the production of wine, then England should always specialize in cloth production and Portugal should always specialize in wine production.

(c) If the total revenue of a monopolist firm is the same for all prices, then the demand for its product is inelastic

. (d) In a competitive market, the marginal cost of all firms is the same and as a result, the firms earn equal profits.

(e) If an outcome is Pareto-efficient, then there is no alternative outcome that is more desirable for the society.

(f) If the supply of a good in the world market is inelastic, then charging an import tariff imposes no deadweight losses.

(g) If consumers in a country benefit from joining a free trade agreement, then producers in the country are hurt by the agreement.

Answer 1