Explain why economists care about unemployment
What will be an ideal response?
First, they care about unemployment because of its direct effect on the welfare of the unemployed. Unemployment is often associated with financial and psychological suffering. Second, they care about unemployment because it provides a signal that the economy may not be using some of its resources efficiently.
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Answer the following statement(s) true (T) or false (F)
1. If each person specializes in his area of comparative advantage and then trades for the goods he wants to have, everyone will be made better off. 2. If no one in a community desires to watch television, then it would be a waste of resources for the community to produce television sets. 3. If good wines can be produced in Turkey at costs lower than in the wine exporting countries, but the local population drinks little wine, then Turkey should not produce wine. 4. Trade will never be beneficial when both parties have a comparative advantage in producing the same good. 5. If everyone had the same abilities, then no one could benefit from trade.
When new technologies are applied to the production and distribution of goods and services:
A. average labor productivity decreases. B. diminishing returns to capital no longer hold. C. diminishing returns to capital still hold. D. scarcity is eliminated.