Refer to Table 2-9. Does either Japan or Thailand have an absolute advantage and if so, in what product?
A) Thailand has an absolute advantage in rice.
B) Japan has an absolute advantage in wristwatches.
C) Japan has an absolute advantage in rice.
D) Thailand has an absolute advantage in both products.
D
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Suppose the economy's production function is Y = AK0.3N0.7. If K = 2000, N = 100, and A = 1, then Y = 246. If K and N each increase by 5 percent, and A is unchanged, by how much does Y increase?
A) 5% B) 10% C) 15% D) 20%
Related to the Economics in Practice on p. 129: Suppose Store ABC runs an ad claiming to have "low prices everyday." They even demonstrate that the total expenditure for a basket of groceries is less at their store than at any of their competitors. Which of the following statements is not true?
A. You would clearly be better off shopping at Store ABC. B. Even if your preferences are generally consistent with the basket used by Store ABC, it may still be possible for you to substitute other similar goods for those in the basket used by Store ABC (in their example) and thus spend less at another store. C. Your preferences may not be consistent with the basket used by Store ABC (in their example), thus it is not clear whether or not you would be better off shopping at Store ABC or not. D. All of the above statements are true.