According to the theory of comparative advantage, specialization and free trade will benefit
A. only that trading party that has both an absolute advantage and a comparative advantage in the production of all goods.
B. all trading parties, even when some are absolutely more efficient producers than others.
C. only that trading party that has a comparative advantage in the production of all goods.
D. only that trading party that has an absolute advantage in the production of all goods.
Answer: B
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Which of the following is the best example of a quota?
A) a limit on the quantity of residential air conditioners that can be imported from a foreign country B) a $150 fee imposed on all imported residential air conditioners C) a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment D) a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers
The expanding “underground” economy creates problems for economic policy makers. Explain
What will be an ideal response?