Related to the Economics in Practice on page 6: The opportunity cost to Mattel of having its Barbie doll assembled in China is
A. the $2 export value the doll carries when it leaves Hong Kong.
B. having the Barbie doll assembled in the next best available location.
C. the low wages paid to Chinese workers.
D. the $8 of its $10 retail value which is captured in the United States.
Answer: B
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Which one of the following statements is TRUE?
A) Over the years, real consumption spending has been more volatile than real investment spending. B) In the Keynesian model, changes in the volume of real investment spending are fully explained by changes in the real interest rate. C) Domestic real investment in the United States was highest during the Great Depression. D) Over the years, real investment spending has been more volatile than real consumption spending.
You have the assignment of making a recommendation to the Chairman of the Fed during a period of persistent, high inflation. What could you do to restore stable prices? What would you recommend instead if the problem was persistent high unemployment?