The difference in the prices of a good in two countries creates opportunities for arbitrage: traders buy the good at a low price in one country and sell it at a higher price in the other. When the difference in the prices vanishes, and the world price is established in both countries, there is no scope for trade anymore because no trader will be willing to buy the good in one country and sell it in another. Discuss the validity of this statement.
What will be an ideal response?
POSSIBLE RESPONSE: This is not a valid statement. Consider Country A and Country B and assume that without trade the price of the good is PA in Country A and PB in Country B, where PA
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Marginal factor cost is computed as
A) total cost of the resource/total amount of the resource being used. B) change in the total cost of the resource/total amount of the resource being used. C) total cost of the resource/change in the amount of the resource being used. D) change in the total cost of the resource/change in the amount of the resource being used.
There are few truly global brands
Indicate whether the statement is true or false
The United States can benefit from voluntary trade a. only with nations that can produce goods the United States cannot produce. b. only with developing nations
c. only with nations in Europe. d. with any nation.
_________________ laws give government the power to block certain mergers or to break up large firms into small ones.
a. Monopoly b. Antitrust c. Mergers and acquisitions d. Business size