Assume that China has a comparative advantage in producing corn and exports corn to Japan. We can conclude that
A) China also has an absolute advantage in producing corn relative to Japan.
B) China has a lower opportunity cost of producing corn relative to Japan.
C) Japan has an absolute disadvantage in producing corn relative to China.
D) Labor costs are higher for corn producers in Japan than in China.
Answer: B
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Institutions:
A) are mostly outside of human control. B) place constraints on human behavior, and these constraints may not be absolute. C) cannot be changed over time. D) do not affect incentives.
Which of the following statements is true?
A) Explicit costs are accounting costs, not economic costs; implicit costs are economic costs, not accounting costs. B) Economic costs include both explicit costs and implicit costs. C) An explicit cost is an actual cost; an implicit cost is a theoretical cost. D) An explicit cost is more important, dollar for dollar, than an implicit cost.