A person has a comparative advantage in an activity whenever she
A) has an absolute advantage in the activity.
B) can perform the activity at a lower opportunity cost than another person can.
C) can do the activity in less time than anyone else.
D) can do everything better than anyone else.
Answer: B
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John Smith is a typical citizen. Economic theory suggests that he is likely to make a more informed choice when he buys a personal computer than when he votes for a congressional candidate. This view is
a. false because the actions of legislators will exert a greater impact on Smith's welfare than will the purchase of the computer. b. false; Smith will tend to choose more carefully when he makes public choices than when he makes private choices. c. uncertain; it would be true if, and only if, Smith's spending on personal computers exceeds his tax bill. d. true; since Smith can decide what computer to buy, but his individual vote is very unlikely to decide the outcome of a congressional election, he has more incentive to inform himself about the computer than the congressional election.
In general, firms will produce at a rate of output such that marginal revenue equals marginal cost because this output rate will
a. bring total revenue into equality with total cost. b. maximize the difference between the revenue received from the last unit and the cost incurred in producing the last unit. c. result in the lowest possible average total costs of production. d. maximize the firm's profit.