Traditional models see no role for the government in pushing individuals toward the preferred equilibrium.
Answer the following statement true (T) or false (F)
False
Although traditional economists see free markets as guarantors of both liberty and prosperity, they recognize that if there are externalities, free markets will not necessarily lead to the best results. Externalities occur when people do not include the effect of their decisions on others in their decision-making process.
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Suppose that the Home country in the twosector (manufacturing and agriculture) specificfactors model has a comparative advantage in manufactured output. Will workers be better or worse off following the opening of trade with other countries?
a. Workers will be better off because the nominal wage increases. b. Workers will be worse off because the nominal wage decreases. c. Workers may be better off or worse off because the real wage in terms of the agricultural good rises and the real wage in terms of the manufactured good falls. d. Workers may be better off or worse off because the real wage in terms of the agricultural good falls and the real wage in terms of the manufactured good rises.
A downward sloping demand curve indicates that
A) individuals all have the same valuation of the same product. B) individuals have different valuations of the same product. C) individuals have no valuations of a particular product. D) certain individuals are uninformed about certain aspects of the product.