Consider a world of two countries producing only wheat and cloth. In one hour, residents of Country A can produce 1 unit of wheat and 0.5 unit of cloth, whereas residents of Country B can produce 0.3 unit of wheat and 0.4 unit of cloth. Country A should
export
A) wheat and cloth; country B should not export anything.
B) wheat and country B should export cloth.
C) nothing and country B should export both wheat and cloth.
D) cloth and country B should export wheat.
Answer: B
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If 1 euro is priced at $1.25 and if 1 euro will also buy 88 Japanese yen($1 = ¥88), in equilibrium, with no arbitrage opportunities, how much is the cross rate between the yen and the dollar (yen-dollar rate)?
a. ¥150/$ b. ¥70.4/$ c. ¥20/$ d. ¥5/$
Suppose that frozen dinners were once a normal good for John, but now frozen dinners are an inferior good for him. John's demand curve for frozen dinners
A) has become steeper as a result. B) has become flatter as a result. C) has not changed as a result. D) has disappeared as a result.