Table 2 The following production possibilities schedule shows the number of hours needed to make one unit of corn and one unit of wine in Canada and Italy. Corn Wine (hrs/bushel) (hrs/barrel) Canada Italy 39. Refer to Table 2. Compared to Italy, Canada has: a. an absolute advantage, but not a comparative advantage in the production of corn b. an absolute advantage and comparative advantage in the production of wine c. a comparative advantage, but not an absolute advantage in the production of wine. d. a comparative advantage and absolute advantage in the production of corn. 40. Refer to Table 2. What is the opportunity cost of one barrel of wine for Italy? a. 4 bushels of corn b. 1/2 bushel of corn c. 1/6 bushel of corn d. 2 bushels of corn 41. Refer to Table 2. For trade to be advantageous for both Canada and Italy, the number of bushels of corn that must be traded for a barrel of wine is? a. less than 1/7 of a bushel b. more than 2 bushels c. more than 1/2 of a bushel, but less than 6 bushels d. more than 1/6 of a bushel, but less than 2 bushels Page 14 of 1942. What does diminishing marginal product imply? a. The marginal cost of an extra worker is unchanged. b. The marginal cost of an extra worker is less than the previous worker's marginal cost. The marginal product of an extra worker is less than the previous worker's marginal product d. The marginal product of an extra worker is greater than the previous worker's marginal product. 43. What does consumer theory provide the foundation for understanding? a. the product demand curve of a firm b. the product supply curve of a firm c. the structure of a firm d. the profitability of a firm 44. Martha and Don are competitors in a local market and each is trying to decide if it is worthwhile to advertise. If both of them advertise, each will earn a profit of $5,000. If neither of them advertises, each will earn a profit of $10,000. If one advertises and the other doesn't, then the one who advertises will earn a profit of $15,000 and the other will earn $7,000. To make the most money, what should Martha do and how much will she earn? (Hint: Draw the matrix) a. She should advertise, and she will earn $5,000. b. She should not advertise, and she will earn $10,000. C. She has no strategy that guarantees her the most money. d. She should advertise, and she will earn $15,000. 45. When oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firms in the market, what do we have? a. a group of oligopolists behaving as a monopoly b. a collusion c. a cartel d. a Nash equilibrium 46. Which of the following events could increase the demand for labour? a. a decrease in output price b. an increase in the size of the labour force c. a decrease in the amount of capital available for workers to use d. an increase in the marginal productivity of workers Page 15 of 19