Refer to the data below. Which of the following statements about the two nations is correct based on the principle of comparative advantage?
Answer the following question on the basis of the data given for two regions, East and West, of a hypothetical world. The nations have the production possibilities for units of food and clothing given below.
A. East should specialize in the production of food
B. West has a comparative advantage in the production of clothing
C. West has a comparative advantage in the production of food
D. West should specialize in the production of clothing
C. West has a comparative advantage in the production of food
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If the Fed has the discretion to choose its policy and announces a low inflation policy, then
a. the public is likely to discount this claim because the Fed has an incentive to change their policy in the future. b. the public is likely to believe this claim because the Fed has no incentive to change their policy in the future. c. the Fed will always cheat and increase inflation in the future. d. the Fed will have to keep inflation lower in the future or they will be voted out of office. e. none of the above.
As more workers are hired, the marginal physical product of labor eventually declines because
A) less efficient workers are hired as the number of workers increases. B) workers do not work well together when the number of workers increases. C) the amount of capital each worker has to work with declines as the number of workers increases. D) of diseconomies of scale.