If a country can, with a single unit of labor, produce more of both clothing and computers than another country, then the first country has
A. a comparative advantage in both goods.
B. an absolute advantage in both goods.
C. an absolute advantage in one good and a comparative advantage in the other.
D. both a comparative and absolute advantage in both goods.
Answer: B
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Which of the following statements is true?
A) Models help economists to explain the past, but do not help in predicting the future. B) The scientific method used by economists is based on idealism and not empiricism. C) Testing with data enables economists to distinguish between good models and bad models. D) Models that economists use are perfect replicas of reality.
A positive externality arises in a situation where a third party, who is not part of a market transaction, _____
a. fails to allocate resources efficiently b. suffers from a market transaction by others c. benefits from a market transaction by others d. pays a pollution tax to balance social costs