Consider a world of two countries facing opportunity costs and producing only wheat and cloth. In one hour, residents of Country A can produce a maximum of either 1 unit of wheat or 0.5 unit of cloth,
whereas residents of Country B can produce a maximum of either 0.3 unit of wheat or 0.4 unit of cloth. Country B should export
A) wheat and cloth; country A should not export anything.
B) wheat and country A should export cloth.
C) nothing and country A should export both wheat and cloth.
D) cloth and country A should export wheat.
D
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In which of the following situations would you prefer to be the borrower?
A) The interest rate is 9 percent and the expected inflation rate is 7 percent. B) The interest rate is 4 percent and the expected inflation rate is 1 percent. C) The interest rate is 13 percent and the expected inflation rate is 15 percent. D) The interest rate is 25 percent and the expected inflation rate is 50 percent.
You share a room in a large apartment complex with three other students, and you want to have an end-of-semester party that may become very noisy
Your lease clearly states that you are not to disturb the other residents, but you believe the Coase Theorem implies that you should be able to bargain with your neighbors and reach an agreement on hosting the party. However, you are wrong and bargaining is unlikely to achieve an efficient outcome. Which condition of the Coase Theorem is not met in your situation? A) Property rights are not clearly assigned. B) The costs of bargaining are too high. C) You must have the property right to host noisy parties for the Coase Theorem to work in this case. D) All of the Coase Theorem conditions are met.