If MRP > P, a firm should use less of that input.

Julie is in the 28 percent tax bracket. She earns an 8 percent rate of return after taxes on a tax-free municipal bond. What will the after-tax rate of return be on a taxable bond (with equal risk)?

a. 36 percent b. 28 percent c. 14 percent d. 8 percent

Answer the following statements true (T) or false (F)

1. The terms of trade will favor a larger nation over a smaller nation. 2. With constant costs in production, specialization tends to proceed to complete-specialization; but with increasing costs, specialization will not be complete. 3. A nation will import a particular product if the world price is less than the domestic price. 4. If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise. 5. The world price for a traded product will be between the domestic no-trade prices of the trading nations.