Refer to the above table. Which of the following statements is correct?
A. The table follows economic principles because in an increasing cost industry, increases in a variable input will lead to increase in output.
B. The table does not follow economic principles because in an increasing cost industry, increases in a variable input will lead to decrease in output.
C. The table does not follow economic principles because the law of diminishing marginal product predicts that increase in a variable input will eventually lead to an increase in the marginal physical product.
D. The table follows economic principles because the law of diminishing marginal product predicts that increase in a variable input will eventually lead to a decrease in the marginal physical product.
Answer: D
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An export industry is said to exhibit increasing returns to scale when
(a) a large-scale organization has significant competitive advantages over small-scale activities. (b) labor utilization increases by 50 percent but export output production increases by only 20 percent. (c) its small-scale business activity has significant comparative advantages over large-scale productions. (d) use of capital increases by 10 percent leads to an increase in export production by 10 percent.
The production possibilities curves illustrated in Figure 35.2 reveal that
A. Mexico has no comparative advantage. B. Mexico has a comparative advantage in baseballs. C. The United States has an absolute advantage in both goods. D. The United States has no comparative advantage.