Operation on the basis of comparative advantages implies which of the following?
(a) Countries allocate their resources across all sectors regardless of opportunity costs.
(b) Countries will specialize even if they can produce everything.
(c) Countries not efficient in any production should not trade.
(d) none of the above.
(b)
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Suppose the production of DVD players can be represented by the following production function: q = L0.4K0.4. Which of the following statements is TRUE?
A) The production function has decreasing returns to scale. B) The production function has increasing returns to scale. C) The production function has constant returns to scale. D) Returns to scale vary with the level of output.
The price elasticity of demand for health care is such that an increase in the price of health care will:
A. decrease total health care expenditures. B. increase total health care expenditures. C. shift the demand for health care rightward. D. shift the demand for health care leftward.