1. The Excess Capacity theorem asserts that because a monopolistic competitor produces an output that is smaller than what it would to minimize costs of production, and therefore has

A. no right to export its good.

B excess capacity.

C a tendency to charge a price that is less than average total cost.

D an incentive to lobby for lower import tariffs.

2. Consider the production possibility curves for England and Portugal. Each country can produce cloth or wine. England can produce at most 10 units of cloth or at most 10 units of wine. Portugal can produce at most 4 units of cloth or 8 units of wine. Which country has a comparative advantage in the production of wine?

A. England

B Portugal

3. An autarkic country has a production possibility curve with constant opportunity costs such that it can produce at most 210 units of silk, or at most 70 units of kerosene. Suppose this country is currently producing 56 units of kerosene and 42 units of silk, and decides instead to produce 69 units of silk; how much kerosene will it produce?