Answer the following questions true (T) or false (F)
1. If a country produces only two goods, then it is not possible to have an absolute advantage in the production of both goods.
2. In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it must also have a comparative advantage in the production of both goods.
3. If the opportunity cost of producing more of one good remains the same as more of that good is produced, then the production method is inefficient.
1. FALSE
2. FALSE
3. FALSE
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Oligopolies exist and do not attract new rivals because
A) of barriers to entry. B) there can be no product differentiation. C) of competition. D) the firms keep profits and prices so low that no rivals are attracted.
Which of the following tax systems would best represent the ability-to-pay principle?
a. A constant tax rate b. A marginal tax rate that is directly proportional to income c. A marginal tax rate that is directly proportional to income up to a certain limit at which it becomes constant d. A marginal tax rate that is inversely proportional to income