"Everybody has a comparative advantage in something." Do you agree or disagree? Why?
What will be an ideal response?
Agree. Since comparative advantage is based on relative abilities, everyone has a comparative advantage in something. If A is better at B at everything, but A is 50 percent better than B in activity X while only 20 percent better than B in activity Y, B has a comparative advantage in Y because B must give up less X to produce another Y than A. The relativity of the concept implies that everyone has a comparative advantage in something.
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Other things being equal, what impact does enhanced consumer information on the risk of colon cancer linked to red-meat consumption have on the equilibrium in the market for beef?
A. A decrease in both price and quantity; B. An increase in price and decrease in quantity; C. A decrease in price and an increase in quantity. D. Not enough information is provided to answer this question;
In an economic model, an exogenous variable is
A) a stand-in for more complicated variables. B) determined by the model itself. C) determined outside the model. D) a variable that has no effect on the workings of the model.