What causes a country to specialize in certain products?
(A) The ability to trade with other nations.
(B) The interests of the citizens.
(C) The resources of the nation.
(D) The money it can earn from producing particular products.
Ans: (C) The resources of the nation.
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If the price elasticity of demand for a good is 5, then a 10 percent increase in price results in a
a. 0.5 percent decrease in the quantity demanded. b. 2 percent decrease in the quantity demanded. c. 5 percent decrease in the quantity demanded. d. 50 percent decrease in the quantity demanded.
Other things equal, if wage rates increase by 20 percent, the greatest decline in employment will occur when labor costs are a:
A. large proportion of total costs and product demand is elastic. B. small proportion of total costs and product demand is elastic. C. large proportion of total costs and product demand is inelastic. D. small proportion of total costs and product demand is inelastic.