If two countries engage in Free Trade following the principles of comparative advantage, then
A) neither relative prices nor relative marginal costs (marginal rates of transformation-MRTs) in one country will equal those in the other country.
B) both relative prices and MRTs will become equal in both countries.
C) relative prices but not MRTs will become equal in both countries.
D) MRTs but not relative prices will become equal in both countries.
E) trade will be unrestricted, regardless of relative costs and MRTs.
C
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In September 2014, 32 percent of unemployed workers had been unemployed for 6 months or more. This long-term unemployment is of particular concern because
A) long-term unemployment is the most costly type of unemployment. B) the U-3 unemployment rate no longer includes these workers in the measurement since they are long-term unemployed. C) the employment-to-population ratio no longer includes these workers in the measurement since they are long-term unemployed. D) the labor force participation rate no longer includes these workers in the measurement since they are long-term unemployed.
Assume that the medical screening industry is perfectly competitive. Consider a typical firm that is making short-run losses
Suppose the medical screening industry runs an effective advertising campaign which convinces a large number of people that yearly CT scans are critical for good health. How will this affect a typical firm that remains in the industry? A) The firm's marginal revenue curve and average cost curve shift upwards in response to the increase in market price and advertising expenditure. The firm increases output until it starts breaking even. B) The marginal revenue curve shifts upwards, the firm's output increases along its marginal cost curve, it expands production until it breaks even. C) The firm's supply curve shifts right and its marginal revenue curve shifts upwards as the market price rises and ultimately the firm starts making profits. D) The marginal revenue curve shifts upwards, the firm's output increases along its marginal cost curve, it expands production and eventually starts making profits.