Consider the following three market baskets:
Food Clothing
A 15 18
B 13 19
C 14 17
If baskets B and C are on the same indifference curve, and if preferences satisfy all four of the basic assumptions, then:
A) A is preferred to C.
B) A is preferred to B.
C) Both A and B answer choices are correct.
D) none of the above
C
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Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. Which of the following is true?
A) Both 10,000 and 30,000 are economically inefficient rates of output. B) If the price of iced tea is $3, consumers will purchase more than the economically efficient output. C) If the price of iced tea is $3, the output will be economically efficient but there will be a deadweight loss. D) If the price of iced tea is $3, producers will sell 30,000 units of iced tea but this output will be economically inefficient.
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.