Question

Included among the reasons why less developed economies tend to have more informal activity than more developed economies is:

Select one:

a. developing economies’ formal institutions are more economically efficient.

b. lower levels of income make complying with rules, regulations, laws, and social norms relatively easier in developing economies.

c. informal institutions are more likely to clash with formal institutions because developing countries’ formal institutions have been recently established while their informal institutions are based on ancient traditions and customs.

d. All of the above.

e. Both b and c above.

Among the advantages from expanding the number of people that comprise a human society are:

Select one:

a. gains from specialization.

b. reductions in risk resulting from unpredictable adverse outcomes.

c. faster expansion of knowledge.

d. All of the above.

e. None of the above.

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

Select one:

a. never have to engage in trade with other nations

b. increase the variety of products that it can produce with a decrease in resources

c. consume a combination of goods that lies outside its own production possibilities frontier

d. produce a combination of goods that lies outside its own production possibilities frontier

Answer 1

C formal institutions are recently established and informal one are traditional and clash arises between them. Also the low level of income for the informal ones makes difficult to comply with rules and regulations.

All of the above. Expanding human society would mean more specialization of tasks, knowledge sharing and reduction in risk of adverse outcomes due to predictability and supporting mutually.

C Consume a combination of goods that lie outside its own PPF because comparative advantage exists when needs to give up less of other for producing one commodity. Also, PPF normally implies amount of other product that needs to be given up for producing one commodity. If both the trading countries are producing a product which it has a comparative advantage then trading between them implies would consume a combination of goods more than it can produce.