All economic models must involve simplifications because
a. economists would be unable to command high salaries if their models were so simple that anyone could understand them
b. human behavior is very erratic and unpredictable
c. reality is too complex to understand in its entirety, so we must reduce it to a level that we can understand
d. they always try to duplicate all possible information and cover all possible variables that might influence decision making
e. we must rely on value judgments and ignore reality
C
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Suppose Brazil has an absolute advantage over other countries in producing almonds, but other countries have a comparative advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil
a. will import almonds. b. will export almonds. c. will either import almonds or export almonds, but it is not clear from the given information. d. would have nothing to gain either from exporting or importing almonds.
Refer to the graph shown. Which statement best characterizes the difference between the effect of a price ceiling in the short run and the long run?
A. A price ceiling of P0 will create a shortage of (Q3 ? Q0) in the short run and the long run. B. A price ceiling of P0 will create a shortage of (Q4 ? Q0) in the short run and the long run. C. A price ceiling of P2 will create a shortage of (Q3 ? Q1) in the short run, but a greater shortage of (Q3 ? Q0) in the long run. D. A price ceiling of P2 will create a shortage of (Q3 ? Q0) in the short run and a smaller shortage of (Q3 ? Q1) in the long run.