Ch. 2 Micro

he primary difference between absolute and comparative advantage is A. absolute advantage is a concept that was utilized in communist countries and comparative advantage is a capitalist idea. B. absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost. C. absolute advantage refers to the ability to produce a good or service at a lower opportunity cost and comparative advantage refers to the ability to produce more of a good or service using the same amount of resources. D. absolute advantage can never change while comparative advantage depends on the relative cost of a​ good's resources.

B. absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost.

One of the great benefits of trade is A. that it provides society what it desires most in life even if it does not enhance the means for achieving its goals. B. that it makes it possible for society to become better off by increasing its consumption. C. that it makes it possible for society to become better off if​ individuals, firms, and countries specialize in producing goods and services for which they have an absolute advantage. D. that it makes it possible for society to become better off by increasing its production but not its consumption.

B. that it makes it possible for society to become better off by increasing its consumption.

A free market exists A. when the government places significant restrictions on how a good or a service can be produced or sold or on how a factor of production can be employed. B. when the government places few restrictions on how a good or a service can be produced or sold or on how a factor of production can be employed. C. when the government places absolutely no restrictions on how a good or a service can be produced or sold or on how a factor of production can be employed. D. only in fiction. There are no markets or economies which even come close to approaching the status of a free market.

B. when the government places few restrictions on how a good or a service can be produced or sold or on how a factor of production can be employed.

The primary difference between product markets and factor markets is that A. product markets are markets for factors of productionlong dash​labor, ​capital, natural​ resources, and entrepreneurial​ ability, while factor markets are markets for goods and services. B. product markets are generally after factor markets in the distribution chain. C. product markets are markets for​ goods, while factor markets are markets for factors of productionlong dash​labor, ​capital, natural​ resources, and entrepreneurial ability. D. product markets produce goods for final sale while the output of factor markets is included in the purchase price of the good itselflong dashfactors are not sold.

C. product markets are markets for​ goods, while factor markets are markets for factors of productionlong dash​labor, ​capital, natural​ resources, and entrepreneurial ability.

The Scottish philosopher Adam Smith argued in 1776 that A. unions would do a better job of coordinating the activities of buyers and sellers than prices could. B. guilds would do a better job of coordinating the activities of buyers and sellers than prices could. C. prices would do a better job of coordinating the activities of buyers and sellers than markets could. D. prices would do a better job of coordinating the activities of buyers and sellers than guilds could.

D. prices would do a better job of coordinating the activities of buyers and sellers than guilds could.

Property rights are A. the rights individuals or firms have to the exclusive use of their​ property, excluding the right to buy or sell it. B. the rights individuals or firms have to the exclusive use of their property within individual culturally defined norms which are inconsistent in each area of the United States. C. the rights government has to the exclusive use of all​ property, including the right to buy or sell it. D. the rights individuals or firms have to the exclusive use of their​ property, including the right to buy or sell it.

D. the rights individuals or firms have to the exclusive use of their​ property, including the right to buy or sell it.