What can we say about the employment of resources if the economy is at a point inside its production possibility frontier?
What will be an ideal response?
If the economy is at a point inside its production possibility frontier, this implies that there is either unemployment of resources or productive inefficiency.
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The net effect of regional trade agreements has been
A) an increase in the total amount of trade in the world. B) a decrease in the total amount of trade in the world. C) no change in the total amount of trade in the world. D) either an increase or decrease in the amount of trade in the world, depending on where trade takes place.
Suppose Country A, a labor-abundant country, produces only wheat and cloth. The following equations illustrate the prices and costs of wheat and cloth in the country. The numbers indicate the amounts of labor and land needed to produce a unit of wheat and cloth. 'W' is the wage rate and 'r' is the rental rate of land.Price of wheat = 1w + 2rPrice of cloth = 2w + 1rIf the initial prices of wheat and cloth are $3 per unit, the labor cost per unit of cloth output is ________ and the rental cost per unit of cloth output is
A. $1; $2. B. $3; $1. C. $2; $1. D. $1; $3.