Specialization of labour led to greater efficiency in the allocation of resources because of
A) the use of barter.
B) an increase in total work effort.
C) greater reliance on self-sufficiency.
D) the opportunity cost of labour increased.
E) the principle of comparative advantage.
Ans: E) the principle of comparative advantage.
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The demand for cars in a certain country is given by: D = 20,000 - P, where P is the price of a car. Supply by domestic car producers is: S = 5,000 + 0.5P. If this economy opens to trade while the world price of a car is $6,000, and the government imposes a quota allowing 3,000 cars to be imported, then the winners are ________.
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