Which of the following is a positive effect of free trade?
a. Buyers face fewer choices in the marketplace.
b. Global competition helps to keep prices down.
c. Producers encounter fewer economies of scale.
d. Some nations operate as closed economies.
b. Global competition helps to keep prices down.
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Someone who knows nothing about the relative quality of a $2 toothbrush and a $7 toothbrush, both available for sale, but chooses to buy the more expensive one, is probably
A) displaying an inelastic demand for toothbrushes. B) judging quality by price. C) violating the law of demand. D) wealthy enough not to care about prices.
In the efficiency wage model, an increase in productivity will cause
A) no change in the real wage. B) an increase in the real wage. C) a decrease in the real wage. D) an increase in both the real wage and the level of employment.