It is possible to have a comparative advantage in producing a good or service without having an absolute advantage

Which of the following factors strengthens the case for policy activism?

A) flexible wages B) lack of real-business-cycles C) sticky prices D) flexible prices

The figure above illustrates the marginal benefit and marginal cost of different quantities of national defense. What is the political equilibrium if voters are well informed?

A) 0 units B) between 0 and 3 units C) 3 units D) 5 units