Refer to Table 2-6. Which of the following statements is true?
A) Lucy has a comparative advantage in making both products.
B) Lucy has a comparative advantage in making tricycles and James in making wagons.
C) James has a comparative advantage in making both products.
D) Lucy has a comparative advantage in making wagons and James in making tricycles.
D
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A country with an overvalued currency
A. will have a balance of payments deficit. B. will suffer losses of foreign reserves. C. must intervene in the foreign-exchange market to buy its own currency. D. All of the above are correct.
Assume the market for orange juice is perfectly competitive. Orange juice producers currently earn a zero economic profit. Orange juice producers will likely begin to incur economic losses in the short run, and some producers will exit the industry until those remaining earn a zero economic profit, if consumers
A. switch from grape juice to orange juice. B. do not change their demand for orange juice. C. switch from orange juice to grape juice. D. All of the above are correct.