Answer the following statements true (T) or false (F)
1. The terms of trade will favor a larger nation over a smaller nation.
2. With constant costs in production, specialization tends to proceed to complete-specialization; but with increasing costs, specialization will not be complete.
3. A nation will import a particular product if the world price is less than the domestic price.
4. If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.
5. The world price for a traded product will be between the domestic no-trade prices of the trading nations.
1. F
2. T
3. T
4. T
5. T
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In the definition of a market, economists consider:
A. actions by third parties that do not include buyers or sellers in the market. B. both actual and potential interactions between buyers and sellers. C. neither actual nor potential interactions between buyers and sellers. D. only actual interactions between buyers and sellers, not potential interactions.
The opportunity cost of current consumption is:
A) nominal wage rate. B) the inflation rate. C) real wage rate. D) the real interest rate.