Suppose that the United States and Mexico are the only two countries in the world and that labor is the only productive input. In the United States, a worker can produce 12 bushels of wheat or 2 barrels of oil in a day. In Mexico, a worker can produce 2 bushels of wheat or 4 barrels of oil per day.
a. What will be the price ratio between the two commodities (that is, the price of oil in terms of wheat) in each country if there is no trade?
b. If free trade is allowed and there are no transportation costs, which commodity would the United States import? What about Mexico?
c. In what range would the price ratio have to fall under free trade? Why?
d. Picking one possible post-trade price ratio, show clearly how it is possible for both countries to benefit from free trade.
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Which of the following laws stated that attempts to monopolize, conspiracies in restraint of trade, and conspiracies to monopolize were illegal? A) The Federal Trade Commission Act B) The Clayton Act C) The Sherman Antitrust Act D) All of the choices. E) None of the choices 6.Until the passage of the Airline Deregulation Act of 1978, the Civil Aeronautics Board controlled all of the following except A) fares. B) assigned routes. C) profits. D) entry into the industry. 7. The Clayton Act prohibited A) interlocking directorates. B) all forms of monopoly. C) foreign control of U.S. corporations. D) false and deceptive advertising. 8. Which statement is true? A) Microsoft is subject to American antitrust laws, but not those of Europe, Asia, or elsewhere. B) Microsoft has never been involved in an antitrust suit. C) The European Commission fined Microsoft over $600 billion for its anticompetitive behavior. D) Microsoft has always gone out of its way to be helpful to its competitors. 9. A monopolist operates at the minimum point of her ATC curve A) only in the short run. B) only in the long run. C) in both the short run and the long run. D) in neither the short run nor the long run. 10. Which of the following is characteristic of a monopoly? A) The absence of political power B) Close substitute products C) The ability to make an economic profit in the long run D) Operating at peak efficiency. (I will send the image) 11. This firm will charge a price of A). $8. B) $9.65. C) $10. D) $12. E) $16 12. Statement I. Only natural monopolies are legal in the United States. Statement II. Large firms generally operate at peak efficiency. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 13. The nation's largest bank has assets over A) $2.5 billion. B) $25 billion. C) $250 billion. D) $800 billion. E) $1.8 trillion. 14. Which statement is true? A) Our money supply is fixed by law and can be raised by only a very small percentage each year. B) Our money supply is backed by gold. C) Credit cards are a form of money. D) Money makes an excellent store of value during times of inflation. E) One of the basic jobs of money is a standard of value. 15. The first bankers were A) goldsmiths. B) printers. C) storekeepers. D) innkeepers. E) blacksmiths. 16. Suppose you had no money in your checking account and your bank granted you overdraft privileges. You then went out and charged $20 on your debit card. How much would your bank charge you in fees for using your overdraft privileges? A) 0 B) $5 C) 15 D) 35 E) $50 17. Statement I: John Maynard Keynes called the hoarding of money at very low interest rates a "liquidity trap." Statement II: Since the late 1990s, Japan has been caught in a liquidity trap. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 18. Banks can A) create money, but not destroy money. B) destroy money, but not create money. C) create and destroy money. D) neither create nor destroy money. 19. The Federal Open Market Committee is made up of all of the following, except A) the board of governors. B) the chairman of the board of governors. C) the president of the United States. D) the president of the Federal Reserve Bank of New York. E) the presidents of four Federal Reserve Banks other than the New York Bank. 20. The Federal Reserve System A) has regional Federal Reserve Banks that make most of the decisions. B) makes decisions subject to the approval of the President. C) makes its major policy decisions in its Open Market Committee. D) makes decisions subject to the approval of Congress. 21. With economic development comes each of the following, except A) a decline in the birth rate. B) an increase in the stock of capital. C) rising per capita GDP D) a declining wage rate. 22. Our educational standards today. A) are the highest in history. B) are much higher than they were 50 years ago. C) are the same as they were 50 years ago. D) are much lower than they were 50 years ago. 23. Brazil should be classified as a(n) A) very poor LDC. B) middle-rank LDC. C) NIC. D) industrial country. 24. The most important reason for our slow rate of productivity growth over the last three decades (of those listed below) is A) lagging business sales. B) foreign imports. C) our low savings rate. D) high tax rates. 25. Structural unemployment occurs when A) workers have quit one job and are looking for a better one. B) high school graduates enter the labor market every June. C) the business cycle is in a downturn and people are laid off. D) the people without jobs have skills that don't match the available job openings. 26. Unemployment caused by economic decline or recession is called A) frictional unemployment. B) cyclical unemployment. C) natural unemployment. 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Statement I: When equilibrium GDP and full employment GDP are equal, there is no inflationary gap and no deflationary gap.Statement II: Equilibrium GDP is an ideal goal that can never be attained. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 31. When government expenditures in a given year are less than tax receipts, there exists A) a budget deficit. B) public revenue. C) full-employment taxation. D) a budget surplus .32. As price rises, the quantity ______________ rises. A) demanded B) supplied C) demanded and supplied 33. If the MPC were .75, what change in government spending (in billions of dollars) would be required to cause the equilibrium level of GDP to fall by 100? A) A decrease of 25. B) A decrease of 50. C) A decrease of 75. D) A decrease of 100. E) A decrease of 125. (I will send the image) 34. When price is $8 A) quantity demanded is greater than quantity supplied and, therefore, price must fall to get to equilibrium price. B) quantity demanded is greater than quantity supplied and, therefore, price must rise to get to equilibrium price. C) quantity supplied is greater than quantity demanded and, therefore, price must fall to get to equilibrium price. D) quantity supplied is greater than quantity demanded and, therefore, price must rise to get to equilibrium price. 35. Usury is considered the charging of A) higher interest rates than people are willing to pay. B) lower interest rates than people are willing to pay C) unconscionably high interest rates. D) extremely low rates of interest. 36. The present value of a dollar rises as A) the interest rate declines and the number of years you wait for your money declines. B) the interest rate rises and the number of years you wait for your money rises. 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Child poverty is A) much more of a problem in France, Germany, and Japan than it is in the U.S. B) less of a problem in the United States than in Canada, Britain, or Italy. C) more of a problem in Sweden, Denmark, and Ireland than it is in the U.S. D) much more of a problem in the U.S. than in virtually all other industrialized countries. 52. Statement I: Social Security payments help mostly the poor. Statement II: Poverty may be defined as a relative concept and as an absolute concept. A) Statement I is true and statement II is false. B) Statement II is true and statement I is false. C) Both statements are true. D) Both statements are false. 53. Compared to their levels in 1999, the poverty line has ______ and the minimum hourly wage has ________. A) gone up; gone up B) stayed the same; stayed the same C) gone up; stayed the same D) stayed the same; gone up 54. In which year was the poverty rate the lowest? A) 1960 B) 1973 C) 1984 D) 1993 E) 2006 55. Which statement is true? 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