Suppose China can produce either 300 telephones or 200 DVD players, and Japan can produce either 200 telephones or 100 DVD players. Implicitly, Japan has

A. A comparative but not necessarily an absolute advantage in telephones.
B. An absolute but not necessarily a comparative advantage in telephones.
C. Neither a comparative nor an absolute advantage in telephones.
D. Both an absolute and a comparative advantage in telephones.

Answer: A

Economics

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Which of the following observations is true of the principle of comparative advantage?

a. It arises from the absolute cost advantage. b. It helps determine most efficient patterns of production. c. It was advanced by Adam Smith. d. It means producing a good using smaller quantities of resources than others.

Economics

There has recently been an increase in the price of dairy products used in the production of ice cream. High temperatures have also induced people to consume more ice cream. In the market for ice cream, the effects these changes will have on equilibrium

price and quantity are A) price will increase, and quantity will decrease. B) price will increase, and the effect on quantity is indeterminate. C) price will decrease, and quantity will increase. D) price will decrease, and the effect on quantity is indeterminate.

Economics