Refer to Table 2-11. Does either China or South Korea have an absolute advantage and if so, in what product?
A) South Korea has an absolute advantage in both products.
B) South Korea only has an absolute advantage in wheat.
C) China only has an absolute advantage in digital cameras.
D) China only has an absolute advantage in wheat.
A
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Return to the situation with the executive from the previous question. Now assume that shareholders cannot observe effort, so cannot specify how hard the executive works in the contract but must induce it through the incentive scheme. Which of the following wage contracts would work out best for shareholders in equilibrium?
a. A flat wage w = 2,500 with no profit share. b. A share of 35% of the gross profits. c. A share of 55% of the gross profits. d. A share of 70% of the gross profits.
If the supply of loanable funds decreases,
a. more loanable funds will be made available in the loanable funds market b. the rate of interest will increase c. the rate of interest will decrease d. the demand for loanable funds will increase e. the supply curve will shift to the right