The cost-plus-markup theory is an inadequate explanation of relative prices because
A) it does not explain why there is a standard percentage markup in most industries.
B) it is too simple, and simple theories are rarely as useful as more complex theories.
C) the theory is inconsistent with observable relationships between marginal costs and prices.
D) people who actually set prices do not describe the process as cost-plus.
C
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If the world terms of trade equal those of country H, then
A) country H but not country F will gain from trade. B) country H and country F will both gain from trade. C) neither country H nor F will gain from trade. D) only the country whose government subsidizes its exports will gain. E) country F but not country H will gain from trade.
When a country allows international trade and becomes an exporter of a good,
a. domestic producers of the good become better off. b. domestic consumers of the good become worse off. c. the gains of the winners exceed the losses of the losers. d. All of the above are correct.