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1) In a global economy, if domestic firms are unable to reduce labor costs in reaction to foreign competition, then most likely:a. employers will be forced to find other ways to cut costs and remain competitive.b. the profits earned by manufacturing firms will be reducedc. the prices charged for manufactured products will have to be raised.d. firms will outsource the manufacturing to a foreign country where costs are lower.
2) Suppose that in Canada opportunity cost of manufacturing 2 television sets is 3 bushels of wheat. Suppose that in the United States the opportunity cost of manufacturing 2 bushels of wheat is 3 television sets. If these two countries specialize according to comparative advantage and then trade with one another, then __________.a. Canada will import both televisions and wheatb. Canada will import wheat and export televisionsc. the U.S. will import wheat and export televisionsd. the U.S. will import both televisions and wheat3) In principle, __________ have ultimate control over the U.S. economy.a. corporationsb. householdsc. multinationalsd. politicians
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