Figure 34-2
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In Figure 34-2, if the United States and Mexico are negotiating to trade wheat for petroleum,
A. the United States must receive more than 1 2/3 units of petroleum for a unit of wheat.
B. Mexico must receive more than 1 2/3 units of petroleum for a unit of wheat.
C. the limits of the agreement are between 1 unit of wheat for 2/3 unit of petroleum for the United States and 1 unit of wheat for 1 1/2 units of petroleum for Mexico.
D. if the agreement is formalized at 1 unit of wheat for 1 unit of petroleum, then Mexico will benefit from the trade but the United States will not.
Answer: C
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In a long-run equilibrium, a perfectly competitive firm's average total cost is
A) minimized. B) higher than the market price. C) zero. D) equal to average fixed cost.
Consider two countries, Estonia and Ukraine. Estonia devotes a larger portion of its production to capital. All other things equal, which of the following statements is most likely true?
A. Ukraine is producing inside its production possibility frontier, whereas Estonia is producing at a point on its production possibility frontier. B. Estonia will move up its production possibility curve faster than Ukraine. C. Estonia's production possibility frontier will shift up and out farther and faster than Ukraine's. D. Estonia is a poorer country than Ukraine.