If country A has a higher opportunity cost in producing good X than does country B, then we know that
A. country B has an absolute advantage in the production of product X.
B. country B has a comparative advantage in the production of product X.
C. country A has an absolute advantage in the production of product X.
D. country A has a comparative advantage in the production of product X.
B. country B has a comparative advantage in the production of product X.
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Refer to Figure 27-1. Suppose the economy is in short-run equilibrium below potential GDP and no fiscal or monetary policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from
A) A to E. B) C to B. C) B to C. D) B to A. E) A to B.
If a good has an absolute price elasticity of 2, the demand for the good is
A) unit elastic. B) inelastic. C) perfectly elastic. D) elastic.